Boca Mortgage Blog

6 Tips To Improve Your Credit Score

May 27th, 2015 12:38 PM by Leonard Silvestri

So you want to improve your credit score. Maybe you want to make a large purchase - like a car or house - or maybe you just want to rank up that FICO score for later. Either way, a jump up on your credit score can mean the difference of thousands in savings and a lower interest rate. FICO scores can rank up to 850 points, though anything above 760 will qualify you for the best rates offered by mortgage companies.

How Is My FICO Score Ranked?

Your credit score is based on a number of bits of information stored in your credit report. It's important to know how your FICO score is evaluated in order to know what factors you will be influencing to improve it. Five major categories are evaluated:

  • Payment History: What is your credit history like? Did you make payments on time? How often were you late?
  • Amounts Owed: How much debt have you acquired?
  • Length of Credit History: How long have you had open credit accounts?
  • Types of Credit: What credit accounts do you have? Revolving? Installment?
  • Credit Inquiries/Accounts: How many credit accounts do you have open or have had open in the past? Are credit inquiries being pulled?

Tip 1: Pay Bills On Time

The easiest way to keep your credit score high is by paying your bills on time. Automate payments so you never miss one or set a reminder on your calendar.

Tip 2: Keep A Low Debt Utilization Ratio

Your debt utilization ratio is your debt amount divided by how much credit you have available. The golden rule is to keep this number below 30 percent. However, the lower your ratio, the better. This rule applies not only to your individual cards, but to your total debt utilization ratio for all cards.

Tip 3: Ask For An Increase In Your Credit Line

If you've been good with your credit, a quick way to boost your score is by asking for an increase in your credit line. If your credit company approves, give yourself a pat on the back, but don't use it as an excuse to increase your spending.

Tip 4: Mix Up Your Types Of Credit

Credit card companies like to see that you're well-rounded. They want to see that you can pay off your car, student loan and your utilities. Make consistent monthly payments where money is due and manage loans responsibly.

Tip 5: Space Out Credit And Loan Applications

Don't apply for ten different credit cards hoping you'll get one or two. This will raise a red flag on your credit report and falls in line with behavior consistent of someone in financial crisis. If you need additional credit, call your current credit company and ask for an increased credit line.

Tip 6: Monitor Your Credit Score

Many people fail to follow through with monitoring their credit score and lose sight of their goal. You're allowed to three free credit reports a year using - take advantage of it. Every four months, pull a report and examine it for anything that seems out of place.

Posted in:General and tagged: credit scoreFICO score
Posted by Leonard Silvestri on May 27th, 2015 12:38 PM


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