10 Ways to Raise Your Credit Score

Posted in Personal Finance by Kevin | Tags: , , ,

A good credit score can be a very important factor for success. It shows lenders that you are a trustworthy borrower and that you will repay back your loans. Without a good credit score, you won’t be able to borrow a car, a house, or even start a new

A good credit score is considered something over 720 and an excellent score is around 780 – 800 and above. However, a credit score under 600 is considered poor.

There are several ways to raise your credit score and all the real ways take some time. If you find advertisements with enticing quick credit score fixes, you can be certain it’s a scam. Following a few or more of these tips can give a significant boost to your score allowing you to finally finance your dream car or buy a house.

1) Manage your Balances.

As simple as this tip sounds, managing your balance can be the fastest way to raise your credit score. Try to keep your balance under 50% of your total credit and ideally close to 25% and you will get a significant boost. Your credit score is lowered when your balance is high because you become a high risk borrower.

2) Can’t Find a Credit Card? Apply for a Secured Card.

If your credit score is too low to get approved for a standard credit card, you can open a secured credit cards. With a secured credit card, you pay an initial deposit that is going to be your credit limit. This is like a small collateral that minimizes risk and ensures the credit companies that you will pay back the credit. The great thing about secured credit cards is that they also report to credit agencies, allowing for a boost after only 3 to 6 months.

3) Reduce Mistakes on Your Credit Report

Almost ten million Americans a year report problems on there credit report- coming from identity theft, reporting errors, and false claims. Under federal law, if the reporting agency does not provide proof of your status to any of the three major credit report agencies, they have to remove it from your score. This is the fastest way to raise your credit report – with an average turn around of 1 month. Once the mistake is removed, your score automatically shoots up.

4) Pay Your Bills on Time.

Delinquencies will really lower your credit score. Make sure you pay your bills on time. Not only will late payments lower your score, but on-time payments will increase them. In fact, every on time payment adds a little to your score.

5) Reduce the number of hard credit card inquiries.

There are two types of credit card inquiries- hard and soft. Hard credit card inquiries are those done by credit card companies and other companies that are going to give you credit. They are initiated by you, the borrower. Each hard credit inquiry stays on the credit report 12 – 24 months. Fortunately, if you are applying for a car loan or a mortgage and have several inquiries in a small time period, only one of these inquiries will count.

6) Diversify your credit.

You don’t want all your outstanding balance to be student loans or a single mortgage. Although I don’t recommend adding to your debt to increase your score – keep this in mind in the future. Having a healthy mix of credit card, car, and house loans is a great way to increase your score.

7) Don’t open new accounts. Loyalty pays off.

Don’t switch credit cards and add accounts too often. The average length of your accounts is very important in determining your credit score. Its better to have 2 credit cards for ten years, then ten for 2 years.

8 ) Don’t bother with store credit cards.

Not only will opening a store credit card decrease your average length of credit, the actual store credit card has a negative impact on your credit score as well. This is because most of these store credit cards are given to everyone- so you aren’t seen as being qualified for having one.

9) Before applying for a new loan, study your credit score.

Being denied new credit or a loan can have adverse results on your overall score. Its wise to study your credit before you apply for a new loan – remove mistakes and try to build up your score a little. It’s also wise to apply for something you are sure to be approved for rather than risking a rejection.

10) Take your time.

Nothing really happens overnight. Take your time, study your credit score and highlight the negatives, then work to fix them. If you feel like one of your accounts is going under, call the creditor and talk to them – they are usually responsive in changing your plan so you can fix your debt.

Have any of you followed these tips to turn around your credit history? Are there any other methods you can try? Let me know, your knowledge is useful!

Comments are closed.

Subscribe for E-mail Updates

Enter your email address:


New on SmarterSpend

Hot Topix

The Library