Financially Tough » raise your credit score

How to raise your credit score

Thu, 24 Jun 2010 06:51:18 +0000

Before we start, raising your credit score, you should know will take time. There are no true credit score quick fixes. You will not go to bed with a credit score below 600 and wake up with a credit score above 700.

To really start working on your credit score, you should first try to understand how your credit score works. The most popular credit score out there is the FICO score and you really should understand the FICO score calculation. If you know this then you will begin to see how you stack up and should be able to come up with your own solutions, depending on your situation, to raise your credit score.

The first thing you should know about raising your credit score is that you must pay your accounts on time. You should never be late. This is the largest part of your score and even one late payment will hurt your ability to get an excellent credit score.

Paying on time is first but second is the level of debt you carry. This is commonly called your debt to credit ratio and having a good debt to credit ratio is key to having a good score. If you commit to paying off your debt you will see an improvement over time. It will be gradual and will take time. This also requires true commitment.

The next part to consider when trying to figure out how to raise your credit score is to look at your credit history. What you need to know that the average age of all your accounts is called into question as well as the age of your oldest account. There isn’t much you can do to manage this piece but maybe not apply for credit and get new accounts if you don’t need credit.

Another thing to consider if you are trying to figure out how to raise your credit score is your applications for credit, meaning are you applying for new lines of credit? You should stick to the rule if you don’t need the credit don’t apply for it. I know all those you get in the mail are great or a 10% discount off the current purchase at the local retailer is tempting, but skip it. The applying for excessive lines of credit can hurt your chance to improve your score.

There are lots of other ways to start improving your score and these are only a few. But the ones above are a good starting point.

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Credit Score Do’s and Dont’s

Thu, 27 Aug 2009 05:19:59 +0000

There are so much advice out these about how to improve your credit score and what you should do to maintain it. Here is a quick list to help you know what is best for your credit score.

Do: Pay your Creditors on Time

This seems obvious but is a struggle for many individuals. This is actually the single worse thing you can do to your credit score becuase your payment history carries such a large weight.

Don’t: Close Old Accounts You Don’t Use

First, closing old accounts could hurt your credit history. More specifically the average of all your accounts. This is a another major factor in your credit score and closing old account will skew the average. Also, you will lower the total available credit you have and thus raise your debt to credit ratio. Another factor that will weight against you in the credit score formula.

Do: Use a Budget Each Month

You need to know where your money is going at all times. A budget is essential to ensure you pay everything on time and pay down any debt you have. This will prevent you from saying at the end of the month where did my money go?

Do: Check Your Credit

You are allowed access to your credit reports free one time a year so take advantage of it. Creditors sometimes make mistakes and you need to check to see if your report is accurage. Cleaning your report of potential errors is a great way to get an instant boost to your credit score.

Don’t: Think You Can Close An Account To Make It Go Away

Many times individual will have an account that has many delinquencies and other issues, but thinking if you close it to make not appear on your credit report is wrong. It will stay on your credit report so there are many times no reason to close it and again you might be hurting your debt to credit ratio.

Do: Shop for Auto Loans and Mortgages

Sometimes you might hear the credit myth that shopping for credit will kill your score because of the credit inquires. Well, this isn’t exactly true. Consumers are allowed to shop for loans that represent a large purchase such as a mortgage or auto loan. They are not suppose to shop for unsecured loans like credit cards. These you know the terms up front and there is no need to shop.

Well, again these are just a few and there are many more, but hopefully there will be more of these down the road for me to write about.

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700 credit score – Can you get one

Sun, 19 Apr 2009 02:14:48 +0000

At what point is your credit score considered good? Well many believe that a 700 credit score is starting point on the credit score scale.

To be good always you need to be better than most and the national credit score is somewhere around 680. Another aspect of credit scores is the fact that are often grouped in pools. The point recognized of going into a higher group would be a 700 credit score. At this level you will join the individuals with scores that are as high as 750.

But this just a general rule. This is because the lines are not really clearly drawn, but a 700 credit score is something very much accept as a good credit score. Many individuals actually class it into the very good level.

So what does having a 700 credit score do for you? It will have an effect on all the money you borrow but one of the largest would be an application for a mortgage. Sites like MyFICO provide a perfect example of this. Directly on their front page is the break down of mortgage rates based on your fico score. If you have a 700 credit score you will pay $32 less per month compared to the next lower range of scores. This might not seem like much but this is just one type of loan you have. When you include your credit cards, auto loans and whatever personal loans you have, it will add up. And it will add up to thousands over your life.

To get a 700 credit score is very achievable but there is no exact formula to follow. If you understand the FICO score formula you should have some ideas on how to raise your credit score. But here is a short list:

Dispute any errors on your credit report
Pay your bills on time
Keep your credit utilization low or at least below 50%
Apply for credit only when you need it
Don’t just use credit cards look for other types of lending

Sounds easy right. Well maybe not if you have had a credit set back. It will take some time but you can get there.

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