Boosting your credit score won’t happen overnight, unfortunately. Sometimes it can feel like an unending battle that forever travels uphill. However, your credit report is a snapshot of your history with payments. Taking this into account isn’t something many people do, hence their bad credit score. Increasing your credit score by 200 or more points can be easily done simply by being financially responsible. Here are several ways to make sure you boost your score.
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Understanding
Our credit histories reflect our ability to pay back loans on time, manage our current debt levels and determine our credit accessibility. Equifax and Experian are two companies that collect credit record information, creating a credit report that some third parties can access (with your permission). Your FICO score (ranging between 300-850) determines whether you will be permitted credit.
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Watch Balances
How much revolving credit do you have on your card? How much of that are you using? A percentage determines your credit rating – a smaller percentage (less than 30%), in this case, is good news for you. That’s why paying down balances and keeping them low is the smart thing to do here.
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Eliminate Balances
Let’s say you’ve been keeping track of your balances – now it’s time to eliminate outstanding balances. Eliminating outstanding balances is one of the best ways you can improve your credit score. Charging more than one card hurts your credit score. If you charge $100 to one card and prefer charging $20 to a different card, your score will require more time and effort to boost.
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Tradelines
Tradelines increase your credit score tremendously. Any account (or credit card) that is on your credit report is called a tradeline. It refers to authorize users who are added to that account – usually because the account is in good standing. This increases your credit line and, by extension, your credit score.
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Who’s Keeping Score?
Unless your credit score is pulled from a vender, you don’t need to pay a fee for reviewing your FICO score. You can access this score yearly, with an explanation of it, for a reasonable price. The price of the report depends on the service you use. Your score is comprised of four statistics: your bill payment timing, outstanding credit, loan types acquired and loan duration.
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Loan Payments
Have you taken out loans? Did you pay them in full and on time? This marks the largest influence on your FICO score – a staggering 35%. You could call loan payments the “biggest slice of pizza.” As FICO reported, people with excellent credit—over 800—have a history of paying their bills (as it relates to their credit report) on time.
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Good Debt
Believe it or not, having old debt on your credit report is good for you. Trying to get charges paid off as soon as possible is detrimental to your score. Good debt, as it’s called, is good for your credit – because it is a debt you’ve handled exceptionally and agreed was paid.
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New Credit
Nobody needs to warn you to avoid applying for subsequent loans carelessly, simultaneously. Especially in the matter of credit cards. Your credit lines’ average age makes up a whopping 15% of your credit score. This means that the higher/older your average age is, the more “healthier” your score is. Inquiring for new credit can also lower your score because it accounts for 10% of your credit score. Therefore, keep your credit for as long as possible before applying for new loans and cards.
Conclusion
Remember, improving your FICO score or your credit score won’t happen overnight. It requires a commitment and habitual action. Stay on top of your credit report and financials to “get out of the hole.”
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