It’s a no-brainer when it comes to your credit score – a higher credit score is always better. Whether you need to repair a bad score or you just want to polish up your already high marks, a high credit score should always be your goal.
Your credit score is a way in which financial institutions and lenders attempt to predict your future financial behavior.
Essentially, they’re estimating whether or not you will be a good customer by paying back the money you borrowed (or pay for the services you’re signing up for, like cell phone contracts). Scores generally range from 850 at the highest point to 300 at the lowest.
If your score is low, the risk managers predict that you won’t be a good investment and they’re likely to increase your interest rate or deny your loan or service contract altogether.
On the flip side, if your credit score is near the top, you’re considered a prime customer that institutions are eager to do business with. A high credit score will open up opportunities for you to borrow money (in it’s various forms) with low interest rates – potentially saving you thousands of dollars.
So how do you raise your credit score?
There are many things that will help to improve your credit score. Here are five of the major things to keep in mind.
Be Patient – There is no instant gratification when attempting to improve your credit score. It takes time and positive financial activity. Think of it like this, you aren’t truly improving your credit score. What you’re doing is attempting to improve your credit report, or the history of your financial activity. When your financial activity improves, it will be reflected in your higher score. So be patient and stay strong.
Credit Report – One of the first places to start is to cleanup any negative (or false) items on your credit report that are having a negative effect on your score. To do this, you’ll need to request a copy of your credit score and your credit report. Ensure that all of the details are accurate and contact the credit agency to correct any mistakes or falsifications.
Be On Time – The next foundational element to raising your credit score it to pay your bills on time, every time. It’s simple, when you pay your bills on time each month, your credit score improves little by little. It won’t be an overnight jump of 100 points, but your score will definitely improve month to month.
Pay Down Your Debt – It’s true that you do need some debt so that you can display your financial responsibility by paying down that debt. But that doesn’t mean you need to max out all of your credit cards and lease a new car every other year. Instead, you can improve your credit score by paying down your debt.
With credit cards, your credit score problems arise when your balance becomes a high percentage of your overall credit line. Try to keep your balances under 40% of the overall credit that’s available to you on each individual card. Stop using your credit cards so much, pay down your balances instead of just shuffling them around, and watch your credit score climb.
New Lines of Credit – Don’t apply for new lines of credit just because you get an offer in the mail. Having more open credit sources won’t raise your credit score. If anything, they’ll tempt you to use them too often and then your back under a pile of debt.
Just remember to be patient, develop a plan of attack, and stick with it. Don’t get frustrated if you don’t see results immediately. If you’re making wise financial decisions and displaying positive financial responsibility, your credit report will keep track and your credit score will begin to improve.
I was worried I didn't have enough lines of credit (read: no credit cards!), so I just opened one (a new credit card through my existing bank) and saw, due to the hard inquiry, my score take a real hit (~90 points). A month in my score has climbed back up by 14 points, but it was certainly jarring to see it drop so dramatically. My hope is, in six months, I take two steps (130 points) forward to sufficiently offset this one step back.
Regardless, thanks for the read. Always good to feel a little more in control of my score, and to be reminded that these things take time, and that patience, as it always is, is a virtue.
I have never been late on any payment that I have had or have. My score remains the same month after month. My credit report in looking it over with the financial inst. that I have credit with or had list me as being good. What is my problem.
Yeah starting out creates some dings to the credit file but with on time payments you should see it rebound. Inquiries hurt more on new or limited credit history. After a year they’ll stop hurting the score so much and two years they disappear. Good luck.
I was laid off for almost 6 months in 2016 and i still cant get my head back above water with my credit score. I had so many go to collections i dont know what to do. Any constructive advice is appreciated. Ive been debating bankruptcy!
visit the credit bureau websites to understand the models the score is based on. An hours worth of education will provide a lifetime of benefit. n
I have seen the cc allow one to deposit 400.00 then to take spend a little like 30 dollars a month pay it off.. then said watch your score rise... well.. I haven't tried.. so no kudos rhere..
Losing a job has got to be one of the toughest things to go through. you have my empathy as my dad went through a rough time 10 years ago with his business and had 2 vehicles repo’d. Well, take it one step at a time. Take an honest look at yourself and ask, “how did I get here in the first place?” Paying off debt is just discipline and patience, but finding the root cause(s) and getting help will certainly place you in a better spot in the future.
Focus on lowest balance first. Put whatever extra you can towards the bill. If you look at everything at once, it can get overwhelming. Don’t take out payday loans. I personally would just let the other stuff sit in collections until you pay the debt that is still open.
Bankruptcy can look tempting (I myself filed) but it’s honestly just there if there is simply no other option. Yes, a chapter 7 will wipe everything away. Yes, a chapter 13 will get you to pay little by little for 5 years then it’s discharged. Either way, it will hurt you for awhile. It’s a decision you have to make. Age, total debt, assets, time you want to be in bankruptcy, figuring your total minimum monthly payments etc, will help you decide whether or not to file. I hope this helps.
If you let those debts go into collections you can be sued and liens put on your property and get your wages garnished .
If you are deep in collections & you have a good job now, file for bankruptcy! You can try to pay those debts slowly & your credit score will never go up. My bankruptcy got discharged a year ago, at the some time my company has been doing well, & so have I financially. After 2 months of my bankruptcy being discharged, I got my 1st credit card offer for a $500 limit with no annual fee from capital one. Now I have 4 credit cards with limits between $1750 (the capital one card), & $3000. My credit score is at 720 & climbs every time these credit card companies show me an updated score. I wish I would have filed for bankruptcy in my 20's because doing so, they flood you with information about building credit & being financially responsible. Resetting your score is easier than trying to build it back after taking so much damage. It's a stupid, wasteful system, but it is the system that is put in place for us.
If you have CC you don’t use or want, what happens if you close them ? I was told it would reduce my credit card. How about reducing the told number of dollars you could have access to?
How can I stop companies from checking my credit report in order to see if they want to solicit me for their credit cards? In other words, credit inquiries I did not initiate?
@Pl130sk wrote:
How can I stop companies from checking my credit report in order to see if they want to solicit me for their credit cards? In other words, credit inquiries I did not initiate?
They are most likely soft inquiries which do not adversely impact your credit score. If you see hard inquiries (for credit applications) that you did not authorize, you can dispute them.
See https://www.creditkarma.com/advice/i/hard-credit-inquiries-and-soft-credit-inquiries/
Your issue could be that you dont have a variety of credit lines. Or you dont have enough credit and or debt (yes, debt! 🙂 Heres what's factored in to the formula for score results:
Payment history: 35%
Amount of debt owed: 30%
Age of credit history: 15%
New lines of credit: 10%
Credit mix: 10%
Hope that helps!
I looked at my credit score and I wonder why TransUnion is always so much lower than the other credit companies.
Actually, I have less on my credit cards etc and my score went down with TransUnion. Less debt etc . Clean report and TransUnion is so negative compared to the other credit companies. My credit score is like 59 points higher than TransUnion.
Something is not right the way they decide.☹️
@Wondering 1 wrote:
I looked at my credit score and I wonder why TransUnion is always so much lower than the other credit companies.
☹️
The three majors compile their own reports and there are several scoring models. Obviously, that accounts for the variation.
What do I do to remove bad credit history from closed accounts. Had mortgage change hand 3 times and with each I had late payments. The final holder of account foreclosed and is now closed but late payment history still shows. What can I do to have these removed to help my score.
@erdjr63 wrote:What can I do to have these removed to help my score.
You really can't do much of anything beyond maintaining a good record going forward and allowing the passage of time to take effect.
See https://www.creditkarma.com/credit-cards/i/how-long-do-late-payments-stay-on-credit-report/
On the other hand, you can and should report errors on your credit report.
See https://www.consumer.ftc.gov/articles/0151-disputing-errors-credit-reports
Use new era debt solutions company. They will negotiate payment of your debts without filing for bankruptcy. They negotiate hard. I am using them successfully. They are the most coat effective company. I can recommend you to them. My email is [email address removed] if you want to email me. I just want the help you.
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Jose a Rivera
I have raised my score from a 512 to a 725 in the last 6 months by cleaning up my report to 0 negative and opening a credit builder account and several store cards and cash cards. I now have $19,800 in available credit and have 1% utilization. Hoping to buy a house next year. I have done a lot of homework to get where I am. Don't believe everything you hear and don't apply for cards that the free credit report companies say you have a good chance of getting, remember they get paid every time you apply through there web sites. Several credit card companies will let you pre qualifiy on there web sites