Is your credit score lower than you\u2019d like it to be? That\u2019s ok \u2013 you have the power to give your score a boost by following the eight tips laid out below. <\/p>\n\n\n\n
The Fair Isaac Corporation (FICO) developed a method for calculating credit scores. Today, FICO\u2019s approach is still one of the most reliable and widely used scoring systems. Most lenders use your FICO score to determine whether to approve your loan. <\/p>\n\n\n\n
Three major credit bureaus track your credit \u2014 Experian, Equifax, and Transunion. If you apply for a loan or credit card, the lender will request your credit report from at least one of these bureaus. Usually, they\u2019ll get a report from two or three reporting bureaus. That\u2019s because your score may vary slightly. <\/p>\n\n\n\n
A good credit score increases your chances of getting approved for a loan or credit card. Higher scores also give you access to better interest rates. <\/p>\n\n\n\n
FICO credit scores range from 300 to 850 and break down as follows:<\/p>\n\n\n\n
See what’s affecting your actual credit score. If you want to improve your credit score, these eight tips can help.<\/p>\n\n\n\n Level of impact: <\/strong>High <\/p>\n\n\n\n If you owe money to lenders, make sure every payment is on time. Credit bureaus analyze your repayment history when calculating your score. If you make many late payments, your score will suffer.<\/p>\n\n\n\n This tip is easy to apply. Pay your bills on or before the due date. Over time, you\u2019ll build a long history of on-time payments. In turn, your score will go up. <\/p>\n\n\n\n If you are going to be late on a payment, let the lender know. Lenders might be flexible if you have an emergency, especially if you usually pay on time. They could waive late fees or accept an alternative payment plan. However, if you don\u2019t tell them and just pay late, they\u2019ll probably report you to credit bureaus.<\/p>\n\n\n\n If you wait too long to pay, lenders may even send your file to a collections agency. Having accounts in collections will make your score drop even more. You want to avoid that if at all possible. <\/p>\n\n\n\n Pro tip: <\/strong>Schedule bill reminders in your calendar so you never miss a payment. Consider using an <\/strong>app to track upcoming bills and automatically remind you<\/a>.<\/p>\n\n\n\n Level of impact: <\/strong>Medium<\/p>\n\n\n\n The credit bureaus put a lot of effort into tracking your score. However, even they make mistakes. <\/p>\n\n\n\n If your score seems unusually low, review your credit history. Don\u2019t worry \u2014 you won\u2019t have to pay for the report. You have the right to get one free copy from each credit bureau per year. They also offer free weekly online credit reports.<\/p>\n\n\n\n After you get your reports, compare the files. Look for errors or signs of fraud like:<\/p>\n\n\n\n If you find a problem, let the credit bureau know immediately. They will correct any errors in your report and recalculate your score. <\/p>\n\n\n\n Pro tip: <\/strong>Sign up for credit monitoring<\/a> so you can receive alerts if your score changes. If a new account gets opened that you don\u2019t recognize, you can act fast to minimize the damage to your score. <\/p>\n\n\n\n Level of impact: <\/strong>High<\/p>\n\n\n\n Lenders don\u2019t just consider your total debt when evaluating your score. They also look at your utilization rate. The utilization rate is the percentage of credit you are using on each credit line, which is your borrowing limit.<\/p>\n\n\n\n Let\u2019s say you have a credit card with a $10,000 limit. If your balance is $6,000, your utilization rate is 60%. Generally, you want to keep your utilization rate under 30%. If you want an exceptional credit score, try to get it under 10%. <\/p>\n\n\n\n Pro tip: <\/strong>Credit bureaus will consider individual and total utilization rates. So if you have two cards, each with a $10,000 limit, they\u2019ll look at the utilization rate per card, along with the overall utilization. Make sure you have a complete picture of where your money is going<\/a> to keep balances low.<\/p>\n\n\n\n Level of impact: <\/strong>Medium<\/p>\n\n\n\n Lenders take your credit history and activity into account when calculating your score. You don\u2019t want to zero out all of your cards and get rid of every loan. The key is to responsibly use your credit. <\/p>\n\n\n\n For example, you could enroll in autopay with your cell phone company and use a credit card to settle your account. Then, pay off the balance each month. This shows continuous activity on your card.<\/p>\n\n\n\n You should also avoid racking up huge credit card bills or applying for new lines of unnecessary credit. It\u2019s helpful to view credit cards as tools for emergencies instead of ways to expand next month\u2019s shopping budget. <\/p>\n\n\n\n Pro tip: <\/strong>Managing and reducing debt<\/a> <\/strong>involves strategically using your credit lines for planned purchases. For instance, you could get gas once a month on your credit card and then pay it off the next cycle. <\/p>\n\n\n\n Manage your money with Quicken Simplifi. Level of impact: <\/strong>Medium<\/p>\n\n\n\n Among other information, lenders want to know that you are financially stable. To determine this, they\u2019ll look at your credit history and account activity. While they expect you to open up new accounts periodically, they don\u2019t like to see many accounts springing up in a short time frame.<\/p>\n\n\n\n For instance, let\u2019s say that you just financed a new car and then opened up three credit cards within a 60-day period. You may have legitimate reasons for opening these new accounts. However, to a lender, it could be a sign of financial trouble. <\/p>\n\n\n\n Pro tip: <\/strong>Try to wait 90\u2013180 days before opening up an account after getting a loan or credit card. This way, your accounts will appear as planned purchases rather than sporadic activity. <\/p>\n\n\n\n Level of impact: <\/strong>High<\/p>\n\n\n\n Canceling credit cards will help prevent overspending and improve your score, right? Not necessarily. Closing accounts can potentially hurt your score in two ways: by diminishing your credit mix and reducing the average age of your accounts.<\/p>\n\n\n\n Your credit mix refers to the various types of credit accounts you have, such as credit cards, student loans, mortgages, and auto loans. A healthy mix can benefit your score, but you shouldn\u2019t open up new accounts just to diversify your mix. Instead, diversify your credit mix naturally over time and maintain old accounts to build your total credit history. <\/p>\n\n\n\n Lenders consider your total credit history when evaluating loanworthiness. The longer your credit history, the more positive it is for your score. If your oldest credit card has been open for 10 years, keeping it open can improve your score. <\/p>\n\n\n\n Pro tip: <\/strong>Don\u2019t close accounts unless you have to (e.g. when selling a home or paying off a car loan). Instead, keep them active and use them responsibly. You can still stay on track<\/a> with your budget if you\u2019re monitoring your accounts closely.<\/p>\n\n\n\n Level of impact: <\/strong>Low<\/p>\n\n\n\n If you are about to take on a major loan, like a mortgage or vehicle note, it\u2019s smart to shop around. However, don\u2019t wait for long stretches between credit applications. <\/p>\n\n\n\n You get a grace period after your credit is pulled to compare options. For example, you have 45 days<\/a> to shop mortgage options after the first credit pull. No matter how many lenders you talk to during this period, you\u2019ll only be penalized for one credit pull. <\/p>\n\n\n\n Pro tip: <\/strong>Have a plan in place before you submit your credit application. Make a list of lenders you\u2019d like to consult and ensure they all run your credit within the grace period. <\/p>\n\n\n\n Level of impact: <\/strong>High<\/p>\n\n\n\n Paying off debt is a long process. However, it\u2019s one of the best ways to improve your score. That said, you need a sound plan if you want to succeed. <\/p>\n\n\n\n Keep track of how much money you make each month, along with all of your expenses and debt. Make sure to include the cost of ongoing needs like rent, utilities, groceries, and gas. Also, determine how much you\u2019re spending on things you want and can possibly adjust. <\/p>\n\n\n\n Pro tip: <\/strong>Easily monitor how much you\u2019re earning and spending with a budgeting app<\/a>. Set a plan with clear savings goals that can go towards paying off debt. <\/p>\n\n\n\n For some, improving a credit score can be a relatively simple and quick process. For others, the road to a high score is longer and a bit more challenging.<\/p>\n\n\n\n Regardless of which group you belong to, the key is diligence. Create a plan, identify what you want to achieve, and stick to it. Before you know it, you\u2019ll be meeting your credit score goals.<\/p>\n\n\n\n
\n Continue \u2192<\/a><\/p>\n<\/div>\nHow can I improve my credit score?\u00a0<\/strong><\/h2>\n\n\n\n
1. Make those payments on time<\/strong><\/h3>\n\n\n\n
2. Check for errors<\/strong><\/h3>\n\n\n\n
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3. Keep balances low<\/strong><\/h3>\n\n\n\n
4. Use your credit responsibly<\/strong><\/h3>\n\n\n\n
\n Continue \u2192<\/a><\/p>\n<\/div>\n5. Don\u2019t open several accounts in a short time frame<\/strong><\/h3>\n\n\n\n
6. Don\u2019t close your accounts<\/strong><\/h3>\n\n\n\n
7. Stay focused when shopping for a loan<\/strong><\/h3>\n\n\n\n
8. Make a plan for paying off debt<\/strong><\/h3>\n\n\n\n
Start your journey toward a solid credit score<\/strong><\/h2>\n\n\n\n