10 Ways to Increase Your (FICO) Credit Score 25 Points
If you haven’t started playing the FICO game yet, here are 10 little-known credit cheats that will help you get to the next credit level. There’s one score that follows you around for life — your credit score!
There is a wide variety of reports about you available to people you want to borrow money from, but the most largely adopted source is none other than FICO which developed the credit scoring system used by some of the biggest lenders in the nation.
Companies like Equifax, Experian and TransUnion provide this information to financial institutions that deal with you and money to determine your creditworthiness.
Your creditworthiness determines what interest rate you’ll get for loans or if you will be approved to rent an apartment. Maybe you’re starting to see how your FICO Score can wreak havoc on your life! So now that you know the basics, let’s get to the reason why you came here:
10 Ways to 1-Up Your Credit Scores
Tip #1. Know and Track Your Credit Score — You can get a Free FICO Score from CreditSesame.com or CreditKarma.com which will tell you your current score and alert you if there are any changes. Correcting errors you see on your credit report can increase your credit score 25 points.
Tip #2. Never Miss a Payment Starting Today — So you might not have had the best track record, but if you can keep your credit clean from now until 2 years from now and your credit score will raise over that time period by itself! You can pay your bills online or use a direct deposit payment so that you never miss a payment can increase your credit score 50 points.
Tip #3. Never use More Than 10% of Your Available Credit — This is one of the lesser known tricks, called credit utilization, to credit score building. If you have a $1500 credit limit on one card, only use a maximum of $150 on it. This rule applies to every card you have and can increase your credit score 25 points.
Tip #4. Keep Credit Cards That Have No Annual Fees Open for as Long as Possible — The length of your credit history is a good indicator for your short term performance on paying a bill or loan. So, even if you’re trying to resist the temptation of using your cards, do not close them. Cutting them up is OK and this can increase your credit score 25 points.
Tip #5. Extend Your Credit Limit on Credit Cards you Already Have Before you get new Ones — This has to do with Tip #3 there, it’s better to have more available credit on one card, then to have it spread around multiple cards. Besides, it’s just easier to keep track of and it will help you not miss your bill cycle. This can increase your credit score 25 points.
Tip #6. Get Credit Cards That Have Cash Back Rewards to Contribute to Your Balance — Get paid to use your credit card? With only 2% or 3% returns the trick here is that you have to use your credit card for most of your purchases. You’ll get a couple of hundred dollars back at the end of the year, and you can use it to pay off your debt or put away in a retirement account. By using your credit every month you can increase your credit score 25 points.
Tip #7. Transfer Your Balance to a Credit Card With a Lower Interest Rate and Higher Available Credit — Not such a tricky maneuver but this one depends on you having another card with a lower interest rate. If you do, try Tip #5 — up your available credit on your current lower interest rate card, then transfer the balance. Utilizing this along with Tip #3 can increase your credit score 25 points.
Tip #8. If you Think you are Going to be Forced to pay a Bill Late ask for an Extension or Payment Plan — Avoid getting a negative mark on your credit report, however possible. Beg, plead, make a deal because once they bring out the smudger, your credit is smudged. Save yourself a major hit, negotiate new payment terms, refinance — creditors really just want their money but some credit places out there are dirty and tricky. You can save yourself 25 points on your credit score — remember each hit is compounding negatively against your FICO points!
Tip #9. Take out a Small Personal Loan and Repay it Over a Year — Tricky, but it works — take out a loan for say $1500 and pay the balance off over the course of the year. If you pay every month on time you will start to build a credit history and increase your credit score 25 points.
Tip #10. Ask Someone With Good Credit if They Will Piggyback you — This a little tricky but piggybacking credit can do the job. Some credit cards allow you to add other people to your account without giving them an actual card. When your friend pays their bills on time it will reflect on your credit report, so will their available balance! But beware if they miss a payment or become delinquent, it will show up on your report as well but this will increase your credit score 25 points.
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