How to Raise Your Credit Score

[BSCHIEBEone]

yes, many employers check how well bills are paid.  I've seen many well qualified people not get the job because of their credit rating and history of credit problems.

[BSCHIEBEone]

Didn't know they take off points if you pay off a loan early.  Why?

[sarge1231]

Join the Myfico forum for all the tips you will ever need. My fico 08 and fico 09 scores are all between 810 and 835. In spite of what some might think, carrying a balnce is not necessary to show use of cards as long as at least 1 card is paid after the statement cuts, but paid in full before the due date. Credit card issuers would love for you to believe that paying them interest is required, but it is not. I have not payed one cent in interest in 20 years. I have 20 credit cards with all having at least 10000 in credit limits. Many, many of that forums members have 800+ scores. Some even have all 6 fico 08, and fico 09 scores at a perfect 850. Anyone who says that carrying a balance and paying interest increases scores is just wrong. By the way, there are many other fico scores for Auto loans, mortgage, and credit cards. If you are serious about these scores, that is where you learn.  https://ficoforums.myfico.com/

[sarge1231]

@pancakes Very sound advice. It is never necessary to pay interest due to carrying a balance...ever! As long as you wait until the statement cuts on one card it will show utilization. I have not payed credit card interest in 20 years. Here are some of my scores.

TU fico08=829 02/28/21
EX fico08=819 03/09/21
EQ fico08=835 03/09/21
EX fico09=833 03/09/21
EQ fico bankcard08=856 01/26/21
TU Fico Bankcard 08=853 01/23/21
EQ NG1 fico=802 01/21/21
EQ Resilience index score=58 03/09/21
Unknown score from EX=784 used by Cap1 07/10/20

The fico 08 and 09 scores max out at 850....the bankcard scores max out at 900. The new score is the EQ resilience score index, and it is from 0-99 with lower scores being better. That score gets worse when your other scores improve usually. It is suppose to be an indicator of how resilient your credit is to an economic downturn. My score in that is moderate, but high everywhere else. The myfico forum is free, but to get all your fico scores on the myfico site is costly. There are about 30 of them between the three major CRA's...Equifax, Experian, and Transunion. 

[sarge1231]

@vn Good advice, and good score...but which score is it? I am guessing it is a fico 08 from one of the 3 CRA's. One thing, if you apply for discover card, you can get a free TU fico 08 monthly. Discover card also provides free to everyone a monthly Experian score at creditscorecard.com. A great resource for learning about credit scores is the myfico forum.   https://ficoforums.myfico.com/     Getting all your fico scores...I think there are 28 total is costly, but the forum is free.

[sarge1231]

@BSCHIEBEone They don't, but the loss of an installment account might hurt the score, especially if it is your only installment loan. It hurts the portion that is credit mix, and since having an installment loan with low balance, so substantially paid off does help your score, it might hurt installment loan utilization percentage as well. It all depends on whether you have other installment loans with low balances. It is not paying it off early that results in a lower score, it is loss of the account in your credit mix and utilization calculations. For very high scores you need at least 1 installment loan and 3 credit cards. The installment loans need to be paid below 50% of original loan amounts. Only 1 of the 3 credit cards should report a balance, with the other 2 having a zero balance. The one card reporting a balance can be paid before the due date, but after the statement reflects the balance. It is what they call AZEO...all zero except 1, and the balance on it should be under 29% of that cards credit limit, and less than 8.9% of all credit cards limits combined. That will maximize your revolving credit utilization, but is in fico 08 and fico 09 a point in time metric. If you lose points due to high utilization one month, paying them down to maximize utilization will recover every single point lost...in other words...utilization carries no history. It will in the future fico 10 T, the T in that score stands for trended data.

[freeturbo1633]

Most credit report websites give you detailed information about your credit score and most banks give access to the one they use which has details about your individual score and how it was calculated as well as how to improve it.  Look for it on your bank's website.

[SupplyCider]

Set up auto pay to pay your entire balance on time every month.   Do not close an account with a good credit record (then the credit agencies won't know about it).  Don't have more than three credit cards in use.   Find out what your credit limit it on each card, and try to stay under half of it.   Don't ever make minimum payments and then waste money on interest payments.   I never had an auto loan, partly because I only bought used cars until I was approaching middle age.  The only interest that makes sense is low-rate home mortgage credit, which is a big reason younger people need to raise their credit scores. 

[M-N03]

Some ways to help raise your score:

1) Pay-off CC balances

2) Pay rent/ utilities on time

3) Only open CC that will help you. If you do end up opening a few, make sure to pay them off and close them as soon as you can

[CMuggetested]

great article!

[tagteam]

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@M-N03 wrote:

3) Only open CC that will help you. If you do end up opening a few, make sure to pay them off and close them as soon as you can

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Closing credit card accounts is not usually a great idea since your available credit limit on the closed accounts can increase your utilization rate, which can hurt credit score.

[ramosfam973]

Get a secured credit card which ever one is best for you and use it for gas and little things but always pay your bill on time. I started with a balence of $200 now im up to $500, and the original $200 i deposited to get the card i got refunded and my credit has gone up 75 points in a year

[Anonymous]

That is a good way to start, but keep in mind that a low credit limit can also hurt you.  I would suggest getting a card with at least $1,000 and always use less than 30% of the limit.  Keep your purchasing below $290 to give room for interest if you are unable to pay the balance off.

I want to also note that even a $1,000 limit is considered low by industry standards and the Vanguard score that you get from Credit Karma and the like, is not what most banks use.  Most financial institutions use the FICO score.  The Vanguard score tends to be higher than the FICO score.

[Brodie 1]

There are 5 publicly know factors that effect your credit score.

The largest factor is 35% of your score, your account history or payment history. 

Simply put, pay your bills, and on time. Life happens, do what you can, the best you can.

Don't delay admitting you may need help.

The next largest factor is 30% of your score. This is your credit utilization. The amount of available credit divided by the current balance shown on your statement. Credit utilization of 0-7 is going to get you the most points possible. Above 7% you start to loose a few points. Not many. Above 15%, you will start to loose a bit more. It's negligible. A realistic recommendation is to stay below 30%. After that you will notice larger drops in your score. Get above 50%, you need to make some changes. How?

There is the easier said than done method, reduce your balances. Still a no brainer. Not as commonly mentioned, increase your available credit limit. Often easier and quicker to do, as long as your score hasn't started to suffer from high utilization.

Monitor and analyze your credit. Need help, get help.

The remaining factors are two that are 10% each and one that is 15%. Only one of those can be easily manipulated. This has to do with Credit Mix.

Just an idea to consider. If a person was judged and received a score for juggling 1 ball, (credit card) wouldn't it make sense that you would get a higher score for juggling multiple items, and various kinds of items? Credit card(s), auto (installment) loan(s), etc.

What is your mix?

The impact of closing an account, should be given consideration. It may not make a lot of sense, but when you pay off your auto loan, which is often considered ideal, reducing your debt, when actually, you may see a drop in your score. Why? A change in your credit mix. Your juggling skills just became a little less impressive.

Should you purchase or lease? Ever situation is unique. Results will vary.

Lastly, watch your number of credit inquiries. A credit inquiry is reported for 24 months on your reports.

How long does it impact o your score?

Ask a lender what bureau or score they use. Know your score. If you are not above the minimum requirements for the lender, don't authorize an inquiry. 

A little knowledge goes a long way.

Credit Repair, it's kinda like auto repair. There are many things we can do on our own, change or even rotate your tires. Maybe install new brakes and rotors. Maybe even add some aftermarket accessories. But if you need a new engine / transmission, alignment, body or paint work for your car, you might need some help. It's okay to admit that, you may need some help.

You may benefit from Credit Repair.

If so, call one of the most recognized names in the industry. 

Learn how to establish positive forms of credit, regardless of your score, or your income. It can be done.

Sincerely,

Ext32449

[johnson65]

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