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.
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:
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.
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.
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.
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.
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.
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 annualcreditreport.com - take advantage of it. Every four months, pull a report and examine it for anything that seems out of place.