3 Easy Ways To Increase Your Credit Score
It used to be that "people" made decisions about your credit worthiness. You knew your banker and your handshake was all the collateral you needed. Those days are long gone, and now a single number - your FICO score - determines your credit worthiness.
Several credit models can be used for this article, however we are going to focus on the Fair, Isaac Company model. Better known as FICO.
Your FICO score is the method used to determine the interest rate as well as how much credit a bank or lender is willing to give you. the cleaner the credit...the lower your rate and larger the sum you qualify for.
Getting and improving your credit score is not hard at all, just takes time. Here is a tip or two that will help you improve and increase your score.
FIRST: Obtain a Credit History
There are many reasons you may have no credit history. Maybe you're just starting out, maybe you pay cash for everything and have never needed a loan. In any case, if you have no credit history, your FICO score is likely to be low.
A fast and easy way to improve or start a credit history is to get a loan and pay it off on time. "Installment loans" are looked at as more important than credit cards. You will show a stronger score if your installment loans are paid up to date and on time then say a consumer credit card.
Another way to acquire a better credit history is to take $1000 and open a 6 month CD account at a financial institution. Now, get an installment loan for $1000, using that CD as collateral. Now, here's the trick. Take the $1000 loan, and open another 6 month CD account at another institution. Take another loan for the $1000 at the second institution. Do this one more time.
In the end you have 3 loans. Pay the minimum payments for 6 months...then cash out the CD's and pay off the loans in full. Now you have a credit history.
SECOND: Keep your credit history clean.
Good job - you have paid your bills on time, and do not have high credit card debt. Here's some ideas to keep your FICO score as high as possible.
Make sure you don't close your old accounts. (Unless of course they charge you a fee of some sort to keep it open.) Part of your credit score is based on the amount of credit available vs. amount used. If you close old accounts you may impact this part of your credit.
Something to think about. The day of the month you pay off your credit card may have a lot to do with your FICO score. Let?s say you have a $2000 credit card. Every month, you charge about $1800 to that card. And, every month you pay it off. But here's what happens - your credit card company reports your credit information monthly to FICO, but they report it on the 10th of the month...and you pay on the 15th. This would cause the credit agency to see you carry forward a balance every month. Try changing the payment times...just is sure NEVER to pay late.
THIRD: Fix your bad credit
For whatever reason, if you have a poor credit history, there are things you can do to improve your score. Some of them take time, and you will probably be best served by talking to a credit counselor to be sure that you not only repair your credit history, but also eliminate what caused that poor credit history in the first place.
Your credit history is the most important part of your FICO score. You need to start paying your bills on time. The value of your bills is as follows. Mortgage first, followed by installment loans, then credit cards.
The next largest factor on your credit is how you have used it. You can improve it by paying off your credit cards.
One final thing to look for is errors in your credit report. Get a copy of your credit report from all three primary agencies, and look at all the entries. You can find the agencies here: experian.com, equifax.com, and transunion.com. If there are any errors, start the process to have them removed. Call your creditors - sometimes they will remove negative information.
A good FICO score is a huge part of your financial life. Keep it healthy. Use these tips and watch your score climb. - 23222
Several credit models can be used for this article, however we are going to focus on the Fair, Isaac Company model. Better known as FICO.
Your FICO score is the method used to determine the interest rate as well as how much credit a bank or lender is willing to give you. the cleaner the credit...the lower your rate and larger the sum you qualify for.
Getting and improving your credit score is not hard at all, just takes time. Here is a tip or two that will help you improve and increase your score.
FIRST: Obtain a Credit History
There are many reasons you may have no credit history. Maybe you're just starting out, maybe you pay cash for everything and have never needed a loan. In any case, if you have no credit history, your FICO score is likely to be low.
A fast and easy way to improve or start a credit history is to get a loan and pay it off on time. "Installment loans" are looked at as more important than credit cards. You will show a stronger score if your installment loans are paid up to date and on time then say a consumer credit card.
Another way to acquire a better credit history is to take $1000 and open a 6 month CD account at a financial institution. Now, get an installment loan for $1000, using that CD as collateral. Now, here's the trick. Take the $1000 loan, and open another 6 month CD account at another institution. Take another loan for the $1000 at the second institution. Do this one more time.
In the end you have 3 loans. Pay the minimum payments for 6 months...then cash out the CD's and pay off the loans in full. Now you have a credit history.
SECOND: Keep your credit history clean.
Good job - you have paid your bills on time, and do not have high credit card debt. Here's some ideas to keep your FICO score as high as possible.
Make sure you don't close your old accounts. (Unless of course they charge you a fee of some sort to keep it open.) Part of your credit score is based on the amount of credit available vs. amount used. If you close old accounts you may impact this part of your credit.
Something to think about. The day of the month you pay off your credit card may have a lot to do with your FICO score. Let?s say you have a $2000 credit card. Every month, you charge about $1800 to that card. And, every month you pay it off. But here's what happens - your credit card company reports your credit information monthly to FICO, but they report it on the 10th of the month...and you pay on the 15th. This would cause the credit agency to see you carry forward a balance every month. Try changing the payment times...just is sure NEVER to pay late.
THIRD: Fix your bad credit
For whatever reason, if you have a poor credit history, there are things you can do to improve your score. Some of them take time, and you will probably be best served by talking to a credit counselor to be sure that you not only repair your credit history, but also eliminate what caused that poor credit history in the first place.
Your credit history is the most important part of your FICO score. You need to start paying your bills on time. The value of your bills is as follows. Mortgage first, followed by installment loans, then credit cards.
The next largest factor on your credit is how you have used it. You can improve it by paying off your credit cards.
One final thing to look for is errors in your credit report. Get a copy of your credit report from all three primary agencies, and look at all the entries. You can find the agencies here: experian.com, equifax.com, and transunion.com. If there are any errors, start the process to have them removed. Call your creditors - sometimes they will remove negative information.
A good FICO score is a huge part of your financial life. Keep it healthy. Use these tips and watch your score climb. - 23222
About the Author:
Doc Schmyz has invested all over the US and Mexico. His website shares Real estate investing information for all over the US. Find real estate information by state
posted by X - Men @ 4:32 AM
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