Credit Score

Need to keep a close eye on your credit? Keep reading to find out how!

Your credit score is a numerical score calculated by assigning values to all the items in your basic credit report, credit history and financial life. It is used to prescreen all credit applicants and eliminate those who fall below a certain score, and also to determine what sorts and amounts of credit you qualify for, and is the primary tool used by most lenders. To find out more about how your credit score is calculated, click here, or for more information on your credit report, click here.

Having a great credit score makes getting credit cards, mortgages and loans so much easier, but did you know that it can also save you thousands of dollars?

It doesn’t matter what you’re borrowing for, or the type of loan or debt it is. The bottom line is, a poor credit score is going to cost you. Fortunately there are techniques that you can use to boost your credit score. Some of these techniques will impact your score in short order, while others will take longer, but nothing will change if you don’t take action today.

How To Pump Up Your Credit Score

  1. The first thing you need to do is get a copy of your credit report, because you can’t fix what you don’t know.  Once you get a copy of your report, start by looking for errors.  Quite frankly, you would amazed at the number of credit reports that have inaccuracies; sometimes even the smallest errors can dramatically hurt your score. If and when you find some of these errors and inaccuracies, contact the credit reporting agencies and request that they correct these errors in your report.
  2. Pay any and all balances on your credit cards every month.  Not only will this improve your credit score, but most if not all credit card companies have a 30 day grace period.  This means that if you pay your balance in full by the due date, you will pay no interest.  Another good idea is to make bi-weekly payments towards the debts on your report. Not only will this save you interest, but you will never have late payments again. If you absolutely have to carry a balance and cannot pay off the credit card in full, just make sure to pay more than minimum required. Not only will this save you money once again, but demonstrates to the lenders that you can manage both your debts and credit rating.
  3. Keep the cards at a minimum.  Generally speaking, having at least two credit cards will work to improve your score, but having four or more cards will only work against you and lower your score. Keep in mind, however, that whatever cards you do have are not maxed out, as maxing them will once again lower your score.  As a rule, try to leave at least 40% of the overall limit on your card available, as this will help you improve your score.
  4. Try to keep total debts and loans at a minimum.  There’s no point in only having 2 credit cards but 7 other loans, it defeats what you’re trying to do.  Once again, try to keep your personal or car loans to no more than a couple.  This way, you will never be carrying a large debt load nor paying a ton of interest to a whole bunch of lenders.
  5. Pay on time all the time!  I know this sounds logical, but you would be amazed at how many folks make late payments.  While it’s true that a late payment is better than no payment at all, the bottom line is that the late(s) still report to the credit bureau and do their damage.  When you make payments on time, not only does your score either maintain or go up, but once again, it demonstrates to your creditors that you have the ability to manage your finances.
  6. Lower the limits!  Make sure your credit card limits are at a reasonable amount.  There is no point in having extremely large credit limits simply because they make you feel good.  When you have really large limits, a few negative things can happen.  You may on an impulse, make a significantly large purchase just because you can.  You may lose your card, giving a thief an opportunity to rack it up.  Or these days through identity theft someone may get a hold of it and once again rack it up.  Plus having a high limit that’s pretty much maxed will only serve to lower your credit score.
  7. Get a secured credit card.  Now if you were a bit foolish in your younger days and basically messed up your credit, don’t despair, there are ways to get it back on track.  One of these is by getting a secured credit card or secured personal loan.  These offer no risk to the lender, and the repayment of these help establish credit for you.

So there you have it, a few practical techniques for pumping up your credit score.  So go ahead and put them to work for you and start down the road to saving money!

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