16 Ways To Improve Your FICO Credit Score
1. Keep Credit Accounts With High Limits - But Keep Balances Low
When you are maxed out on credit cards, your score drops. Lenders look for borrowers with lots of unused available credit.
2. Add Your Name To Someone’s Credit Account
Piggybacking off of someone else’s good credit is an easy way to improve credit rating. Your credit report will benefit each time the primary account holder makes a payment or payoffs the credit account.
3. Dispute Delinquent Credit Accounts
Visit all 3 of the major credit bureaus websites: www.transunion.com, www.experian.com & www.equifax.com. Pull your credit, and then dispute any reportings that are inaccurate. If
the credit bureau cannot verify the information, the incorrect reporting
will be removed.
4. Cut Out Some Revolving Debts
Too many revolving credit accounts can hurt your credit score. Limit your number of credit card accounts and keep the balances low.
5. Pay Bills on Time
One late payment can reduce your credit score by 10 – 20 points. On the other hand, you gain about 5 points for timely payments.
6. Get Current on Past Due Accounts
Even if a creditor stops collection attempts on delinquent or past due accounts, the account does not miraculously vanish. Once a past due account is reported to the credit bureaus, your credit score takes a nosedive. Make an effort to repay the old debt, and ask the creditor to delete the negative remark from your credit report. However, there is a flip side to this. Be aware, that after a year or so after a collection account is reported on your credit report, if you go back and pay that collection account, there is a chance that it will drop your credit score again, because it will bring that negative report that was in the past, back into the present.
7. Avoid Consolidating Credit Card Debt to 1 Card
This raises your debt-to-limit ratio, which hurts your credit score. It is better to have your debt spread around to more cards than be at 75% or 100% of the limit on your credit card.
8. Avoid Opening New Accounts All At Once - Spread out your opening of new accounts over time. If you open more than one account within a short period of time, it will drop your credit score.
9. Avoid Credit Inquiries - - Almost every credit inquiry drops your score just a little. If you apply for too many loans all at once, you can drop your score to the point that you can no longer get approved for a loan. Credit inquires affect your credit score for about 90 days.
10. Don’t Close Old Account and Don’t Have Them Removed From Your Credit Report - Old credit accounts help your score. Closing those accounts will hurt your score.
11. Start Using Credit Cards For Things You Wouldn’t Normally Use Them - Then, pay off the card at the end of the month to show stable payment history.
12. Do Not Max Out Credit Cards
This indicates a lack of financial self-control and increases your debt-to-income ratio. Even if you submit timely payments, your credit score can remain in the low 600’s if you are maxed out on credit cards. Reduce debts, and keep balances below 25% of the credit limit.
13. Avoid Filing Bankruptcy
A bankruptcy may seem like the only solution to severe debt problems. However, the long-term effects are worse. After a bankruptcy, your credit score can plummet 100 or more points. A bankruptcy is more serious than having past due, collection, or judgment accounts.
14. Get Credit Help, But…
Using a credit counseling or debt consolidation agency can decrease your credit score. Choose agencies that do not report “third-party assistance” to the credit bureaus. To avoid scams, select a non-profit organization.
15. Close Accounts Slowly, Starting with the Newest
If you must close a few credit accounts, do so slowly and start with the newest accounts. Closing your oldest credit account will reduce your credit history, and lower your score.
16. Make Sure the Creditor Reports to the Credit Bureaus
Some creditors only report delinquent or past due accounts to the credit bureaus. If trying to establish or rebuild credit, good remarks are essential. Before applying for new credit, be certain that the creditor consistently reports to the bureaus.
