10 Tips To Get A Higher Credit Score
You may have heard of a credit score and its effect on whether you qualify for loans, a new car, a specific job, and other ways. But you don’t quite understand how you can make it better. Here are 10 tips to get a higher credit score:
1. IMPROVE YOUR PAYMENT HISTORY
The biggest thing that affects your credit score is your number of missed and late payments. Even one late payment in the last twelve months can severely damage your credit score.
The solution would be to pay on time, right? A great tip is to automate all of your payments. Automation prevents you from forgetting a payment and averting late fees, higher interest rates, and forfeiting your grace period.
2. STAY BELOW YOUR LIMIT
The next thing that affects your score is how much credit you are using. For example, if you have a $10,000 limit and spent most of it, it’s unlikely you’ll be able to pay it off and incur a lower credit score.
Credit bureaus want you to use very little of your credit, less than 10%, but more than 0%. You can improve this by paying the debt or increasing your credit limit. Call your credit card company and ask for a higher credit limit or pay off that debt to under 10%.
3. HAVE A LONGER CREDIT HISTORY
The longer you’ve had a positive credit history, the higher your score will be.
To improve your credit history, close any new accounts you don’t need and keep old accounts open, even ones you haven’t used in a while (especially if they have high credit limits).
4. HAVE DIFFERENT TYPES OF CREDIT
Creditors want you to have multiple responsibly-handled accounts. Credit scores will be different for those with five credit cards than those with two credit cards, a car loan, a mortgage loan, and a line of credit. The more mixed one will have a higher score.
There are two ways to improve this. One is to close accounts you don’t need and open ones that will give you a favorable mix of credits.
5. REDUCE CREDIT INQUIRIES
Every time you apply for a loan or a credit card, they will check your credit report. Creditors want to see less than two inquiries in the last two years, and these credit inquiries can stay on your credit report for up to 2 years.
To get a higher credit score, keep inquiries to a minimum by not opening new accounts for a while.
6. GET AUTHORIZED
Become an authorized user on other people’s accounts (such as your spouse’s).
Creditors will report your credit report and the original account holder’s report. However, remember that any negative actions by the original owner also get reported on yours.
7. USE THE “PAY TO DELETE” OPTION
Delinquent accounts can deduct about 100 points from your credit score. If you start making payments, it doesn’t affect the negative score. Instead, ask to “pay to delete,” which means to pay the creditor in full or a negotiated percentage in exchange for removing the adverse credit.
Be sure to get it in writing before paying it.
8. RE-SCORE YOUR REPORT
Re-score your report can only be requested by banks or mortgage brokers.
They can request your credit to undergo a rapid re-score where they recalculate your score within 72 hours. The great thing about this is that it corrects all the incorrect, harmful, and outdated information on your credit report.
9. WRITE A GOODWILL LETTER
If you usually pay on time and regularly but forget one payment, that can damage your credit by up to 100 points.
Write a goodwill letter to your creditor requesting the removal of the late payment from your report. Explain what happened – failed online payment, financial hardship, lost track, etc. Be polite, provide proof of error, and thank them.
10. DO FREQUENT CREDIT CHECKS
Check your reports and report any errors as soon as you find them.
Credit bureaus receive so many it’s hard to keep up. It’s your responsibility to check for charge-off errors, unpaid errors, accounts that don’t belong to you, past seven years old, reported wrong credit limits, and anything else wrong.
Contact us for more tips to get a higher credit score.