Boost Credit Score Quickly
A FICO score is a three-digit number that is built from the information contained in your credit report. It summarizes information like your contradictory accounts, payment history, the amount of debt you carry, the length of your credit history, the amount of new credit you applied for, and the type of trade lines you have in your report.
What is a good score?
Lenders say that with a 720-760 score, you get the best prime rates. With a 620, you get the sub-prime, riskier rates.
● 750-850 – Excellent.
● 660-749 – Good.
● 620-659 – Fair.
● 350-619 – Poor.
How is my score calculated?
Your payment history calculates your credit score, the amount you owe, the length of your credit, what new credit you have applied for, and the type of trade lines you have.
Your paying habits are worth 35% of your credit score. If your late payments are recent, it will lower your score more than if you were behind in the past. Also, a 90-day-late indication will severely damage your score over a 30-day mark. Also, public records like tax liens, judgments, and bankruptcies fall into the same category and could take your score down even further, so make sure you are current with the creditors and always pay your bills on time.
Amount you owe
The balance on your accounts is worth 30% of your available credit score. So, using all of your credit will worry lenders and hurt your score. The lower your balance is, the better your score. You want to keep your balances around 7% to 10% for each account. Also, if you make a big purchase and want to maintain the 10% balance level, make sure you pay off your purchased item before your bill cycles. If you pay after the cycle, the lender will report your high balance.
Length of credit
The amount of time you’ve had your credit makes up 15% of your credit score. The age on your trade lines is significant to lenders because it shows your history regarding paying bills on time or not. Reliability and longevity are good traits for additional credit, so don’t close old accounts. If you have too many accounts and you want to close a few, close the accounts that are new with low limits.
New credit makes up 10% of your score. The FICO model looks at how many accounts you’ve applied for lately, as well as any new accounts you have opened. The model looks at the time passed since you requested new credit, and the amount of time since you opened another account. If you open too many accounts in a short period, you will look desperate to the lenders, and they don’t like loaning money to needy customers. So try to not apply for more than two new accounts per year.
Type of credit you use
This section makes up 10% of your score. FICO wants to see a healthy mix of trade lines like a couple of major bank cards, retail store cards, and installment loans like a car, personal, or mortgage loan.
How can I improve my credit score?
Remove inaccurate information from your credit report
You can start by removing errors from your credit report. While scanning your credit report, look for any hard inquiries that you did not authorize. Hard inquiries could lower your score as much as five points per inquiry. Get the creditor to prove that you permitted them to pull your credit report, and if they can’t prove it, then the inquiry must be deleted according to the law.
Contact the creditor
When disputing an item on your credit report, you should not only contact the credit bureaus but the creditor as well. Make the creditor prove that you were late, as they are reporting it to the credit bureaus. If they can’t prove that you were late, ask them to delete the negative item. This can improve your score.
Pay your bills on time
Make a list of all your debts and their due dates. Then, type the due dates into your computer and cell phone calendars with powerful reminders. Use an internet banking program and your online credit card site to send email reminders regarding when your bills are due. Besides, you can set up your accounts to have money automatically taken out at the due date. When paying your bills, you can pay them as they come in using online banking or bill pay or through your financial institution website. Using the various methods mentioned above will help you pay your debts on time. Making each payment on time raises your credit score and keeps you in good standing with your creditors in case you request a credit increase.
Pay down your debt
Put your debts in order from the card with the highest balance to the lowest. Pay each account down to 7 to 10% and keep it there to increase your score. Finding money to help you pay down your debt may be difficult, but there are numerous ways to raise extra cash. You can have a garage sale, sell items on eBay, get an extra job, pull from your savings, borrow from friends, and cut your expenses. Any of these are an option.
Don’t close old accounts
Closing trade lines won’t help. It will hurt your score by reducing your total available credit, and it will make your balances seem higher. It also makes your total credit history look young, and the FICO model likes to see the age on accounts because of payment history. Lastly, you want to keep the cards active by having a monthly bill debited from your card at the end of the month to avoid the creditor closing your account due to lack of use. Most lenders will close inactive accounts after 18 months of not using the card.
Ask for a credit increase
Ask your creditor to raise your credit limit to reduce your balance. This will help raise your score slightly. Only do this if your balances are low with your other credit cards.
Apply for credit sparingly
Please don’t apply for many accounts in a short period because the credit bureaus will send a Trans Alert to the creditors informing them that you have applied for multiple accounts.
Ask your creditor to re-age your account to improve your credit score. This method is the process by which your creditor agrees to forgive your late payment history and reclassify your account as up-to-date. You must qualify for re-aging, according to the Federal Financial Institutions Examination Council (FFIEC), and establish and follow a policy that requires you to demonstrate a renewed willingness and ability to repay the debt. The account must be at least nine months old, and you must make three consecutive, monthly payments.
Rapid re-score with mortgage lenders
This method is used when you are trying to buy a home. With this strategy, the lender will review your credit report and tell you which item needs to be paid off or fixed. You will then pay off the negative items and get proof from the creditor. You then give the proof to the lender, who will give it to the third-party vendor, who passes the information to the credit bureau. The bureau will then update your credit report, reflecting your new credit score. This strategy is used, primarily, when you are trying to get a house. A third-party vendor offers this feature, and the credit bureau contacts the company. The service is not offered to the public, only to mortgage brokers.