TOP 5 CREDIT TIPS YOU NEED TO KNOW TO INCREASE YOUR FICO SCORE
1. Know Your Credit Score and Get Copies of Your Credit Reports
The first thing you want to do when fixing your credit is to find out your credit score and get copies of your credit reports.
You can get your VantageScore 3.0 score free on Credit.com and your FICO score for just a $1 once enrolled. You also get a free credit report card and an updated score every 14 days, so you can track your progress toward fixing your credit.
Your credit score is separate from your credit reports. And your reports don’t include your scores. But, thanks to the Fair Credit Reporting Act, you can get free copies of your credit reports from the three main credit bureaus—
Experian, Equifax, and TransUnion—once a year. You can access all of your free reports thru AnnualCreditReport.com. Or get your reports directly from Experian, Equifax, and TransUnion.You want your credit reports from each of the major credit reporting agencies because each one can contain different information that impacts your scores. You rarely know ahead of time which agency’s report a lender will pull, so it’s important to make sure each report is accurate and that you’ve corrected any issues.
2. Fix Any Errors on Your Credit Reports
Once you’ve looked at your credit reports, you want to fix any errors you find. For most people, the process of fixing errors on credit reports is known as credit repair. Credit repair is something you can do on your own. Or you can turn to the help of a professional credit repair company for help with fixing your credit. Whichever option you choose, start as soon as possible.
If you do find errors, you won’t be alone. From October 2016 to September 2017, the Consumer Financial Protection Bureau (CFPB) fielded 85,000 complaints about credit report errors. Fortunately, federal law lets you dispute credit report errors with the credit bureau that’s reporting the error.
3. Maintain Healthy Credit Accounts
Your payment history is the most important factor in your FICO credit score and accounts for 35% of most scores. VantageScore doesn’t provide percentages, but the percentages used are likely similar to FICO’s. And even just one late payment can drop your scores significantly. Having a good payment history is critical to maintaining healthy credit accounts. Fixing inaccurate negative information on your account is fairly easy. But, if you have accurate negative information on your credit reports, it can take a long time for it to age off.
4. Examine Your Credit Utilization
Credit utilization is the amount of revolving debt you have relative to your credit limits. More specifically, it’s your available revolving credit, which is your available credit limit, compared to your total credit debt or the amount you’ve actually charged on your cards or credit lines. It’s also the second most critical factor in how your credit scores are calculated Say you have a single credit card or home equity line of credit with a $5,000 credit limit—this is your revolving credit. If you have a balance on that card or credit line of $1,100, that is your total credit debt. In this case, your credit utilization is 22%.
To protect your score, it’s best to keep your credit utilization below 30% of your credit limits. A 10% credit utilization amount is ideal. An amount of 30% or less shows creditors that you can manage your available credit responsibly without maxing out your credit limits.: If you pay a credit card off on time regularly, your issuer will likely see you as a good credit risk and increase your credit limit. Don’t however start charging more. Simply charge the same basic amount. Doing so will keep your utilization lower! Say you started with a $2,000 limit and charged just $200 a month, you had a 10% utilization. If your limit is raised to $4,000 and you continue to charge just $200 a month, your utilization is now just 5%.
If you do go over the 30% mark, you can most likely undo any small decrease in your credit scores by paying off those balances and getting your overall utilization back to 30% or less as quickly as possible. It’s best, if possible though, to keep your utilization to the 30% cap at all times.
5. Keep an Eye on the Age of Your Credit
The age of your credit accounts is another factor in your credit standing. It accounts for roughly 15% of most credit scores. It’s also a part of your credit utilization, which makes some credit better than no credit. The age of your credit is calculated by looking at the age of your oldest account and the average age of all your accounts. If credit age is hurting your scores, you can’t really do much about it. You do, however, want to avoid closing your oldest accounts if possible.
If you don’t have any credit history, consider opening a credit card that you don’t use or use very sparingly. The card will at least be reported on your credit history and build up a history of its own. One note: It may be best to have a card that you use a little bit and pay off in full each month. Why? This will prevent the issuer from closing the card due to inactivity. When you apply for a new card, you can also find out about the issuer’s policies on closing cards for inactivity.
Contact Us
If you would like to find out more about what Allstar International Group can do for you or to receive a quote, don’t hesitate to contact us. We’d love to hear from you!