Improve Your Credit Score

The journey to improve your credit score is a marathon, not a sprint.

An excellent score can help you qualify for a low-interest loan and premium rewards credit card, but the process takes time.

You can start by checking your credit score to see where you currently stand.

Once you know how much room you have to develop, start building better credits using these tips.

7 steps to increase your credit score

Stay on top of payment.

Keep track of your credit usage rate.

Leave old debts on your report.

Take advantage of score-boosting programs.

Watch your applications carefully.

Be patient

Monitor your credit.

1. Stay on top of payment

To show lenders responsible with credit, keep your loan in green.

According to Experian, payment history is the most influential scoring system for both FICO and VantageScore.

Your credit score is essentially a reflection of your ability to effectively pay back the loan. From a lender's point of view, an established history of timely payments is a good indicator that you will handle future loans responsibly.

"You want to avoid things like late payments, defaults, repositions, foreclosures, and third party collections," says John Ulzheimer, a credit expert, formerly FICO and Equifax. "And filing bankruptcy is a terrible idea. Anything that would indicate non-performance of a liability would harm your credit score. "

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2. Keep an eye on your credit usage rate

Weigh your balance relative to your credit limit to ensure that you are not using too much available credit, a practice that may indicate risk.

"The higher this ratio, the less points you earn in that category and the more likely your scores will be to fully pay," says Ulzheim.

Credit usage is one of the most influential categories that affects your score. Your ideal rate may vary depending on the scoring system used.

"In Fico's system, less than 10 percent is the optimal target," Ulzheimer says. "In fact, people who have the highest FICO score have 7 percent usage." VantageScore, on the other hand, seeks target usage of 30 percent or below.

"I always default to 10 percent because it gives you a chance to put in a good field for the scoring platform," says Ulzheimer.

Reports reported by the credit issuer to the credit bureau by your credit issuer may also affect your utilization rate.

According to Ulzheimer, FICO's scoring systems do not differentiate between those who pay in full each month and those who keep a balance; This is the rate used by your issuer reporting your account information. VantageScore, however, considers whether you pay the entire month or the balance of the month.

If you struggle with higher balances and increased interest payments on your card, consider consolidation with a zero percent introductory rate balance transfer credit card.

3. Leave Old Debt on Your Report

Once you finally get rid of student loans or pay off your auto loan, you may be impatient to get any traces erased in your report.

But those loan records can really help your credit score as long as your payments were timely and complete. The same is true for credit card accounts.

“A fully paid account is a good thing; However, account closure is not something consumers should do automatically in the hope that it will positively affect their credit score, ”says Nancy Bisitz-Balkan, vice president of communications and consumer education at Equifax. "Having an account with a long history and solid track record of paying bills on time, responsible habits are the type of lenders and creditors."

Any bad debt that can negatively affect your score is automatically removed over time.

"Your report on bankruptcy cannot last more than 10 years," says Ulzheimer. "Late payments and similar delays like collection, reposition, foreclosure and settlements, which are capped at seven years."

4. Take advantage of score boosting programs

Both the number and average age of your account are important factors in determining how well you handle a loan, which can leave you at a loss with a limited credit history.

Axion Boost and Ultrafico are two programs that allow consumers to promote thin credit profiles along with other financial information.

After moving to Experian Boost, you can add your online banking data and add telecommunications and utility payment history to your report to the credit bureaus. UltraFICO allows you to check your banking data and savings accounts to consider along with your report when calculating your score.

5. Watch your applications carefully

Every time you apply for a new line of credit, a rigorous check is done on your report. This type of investigation reduces your score temporarily.

"Generally, the effects of a stringent inquiry last anywhere from 6 to 12 months," a TransUnion representative tells Banket. "And this check is only on your credit report for 24 months."

To ensure that you are a good candidate, research your possibility of approval before applying for a new credit card. You do not want to lower your score for rejected applications.

You should avoid applying for multiple credit cards within a short period of time or before making large loans.

When you shop for a mortgage, auto or personal loan, you can make a minimal inquiry by comparing the rate within a short period of time.

Applications for the same type of loan within a specified time frame will only appear as one check. According to FICO, this period can vary from 14 to 45 days.

6. Be Patient

You have not increased your credit score overnight, which is why one of the best ways to get an excellent score is to develop long-term credit habits.

According to Ulzheimer, the two influential factors that go into your score are the average age of information and the oldest account on your report.

"In fact you'll need credit for a few decades before maximizing those categories," says Ulzheimer. "A bad score takes a really long time to improve, and very little time to cancel a good score."

Establish good habits, such as paying your balance on time, maintaining a low utilization rate, and applying for credit only when needed, and you should see those practices in your score over time.

7. Monitor Your Credit

When you check your credit, a soft check is prepared, which does not temporarily affect the way your credit makes tough inquiries.

"Credit report information not only enables you to view all of your financial accounts in one place, but also can give you signs of identity theft," says Bishit-Balkan.

Monitoring the fluctuations of your score every few months can help you understand how well you are managing your credit and whether you should make any changes.

According to Ulzheimer, "As long as you pay your bills on time and as long as you keep your credit card balanced and as long as you only apply for credit when you need it, then you have a really good one. There is no choice but to be.. Score."