7 Ways to Get a Better Credit Score
I've never had a credit card, but building credit is something we all have to eventually do. Because I really don't know much about it, I've done a lot of research. Justin and I also received an engagement present in the form of a book called "Personal Finance for Dummies". This book is the most educational piece of writing I have ever read. It's easy to follow and actually fun to read and learn from. I highly recommend it to anyone, here's a link to pick it up yourself. These are some tidbits I've picked up, I hope they help anyone who comes across this post.
1) Get your current credit score:
Head over to myfico.com to order it for about $16. This score is based on your report from any of the bureaus. Remember that over checking your score can lower it slightly, if you think there might be an error with your score, see #6 on this list.
2) Pay off all of your credit cards:
Gradually paying off your debt can boost your score substantially. Also, ask your card issuer for a credit-line increase, if you get an increase but don't spend more, this will modestly boost your credit score.
3) Don't be late:
Even if you can only afford the minimum, pay your bill on time, a late payment is very detrimental to your score. One skipped payment can knock 100 points off your score! It is a lot harder to get it back up afterwards. To keep on top of your bill, it's wise to track your credit account online and send in a check before the card's cycle ends. Some unscrupulous companies send your bill very near the due date, hoping you will be late so they can tack on fees.
4) Piggyback on better credit:
If your husband or parent has great credit (and trusts you) ask them to make you an authorized user on their credit card. Authorized users don't share the liability for the debt, but the positive payment history gets factored into their score. Also, you will benefit from a boost in available credit.
5) Curb your credit cravings:
When applying for a new card, you're intending to take on new debt. This can raise your risk as a borrower, and can cause a 5 to 10 point drop in your score. Wait a few months before applying for a loan after a new card, to show your responsibility.
6) Remove errors:
Your credit report affects your credit score. Up to 80% of reports have one error. You can get a free report annually from all three of the credit bureaus. Pulling a different one every 4 months can help keep errors in check. Visit annualcreditreport.com for your free reports. If you find any mistakes, send bureaus the correct information.
6) Don't become plastic shy:
Going "cash only" won't improve your score. Only by continuous responsible usage can your score improve. If you hit your limit, your score can drop 30 points in one month, but if you keep your balance below 10% of the limit, you can restore your score.
Keep up the good work and you could sail past 760 in no time!
1) Get your current credit score:
Head over to myfico.com to order it for about $16. This score is based on your report from any of the bureaus. Remember that over checking your score can lower it slightly, if you think there might be an error with your score, see #6 on this list.
2) Pay off all of your credit cards:
Gradually paying off your debt can boost your score substantially. Also, ask your card issuer for a credit-line increase, if you get an increase but don't spend more, this will modestly boost your credit score.
3) Don't be late:
Even if you can only afford the minimum, pay your bill on time, a late payment is very detrimental to your score. One skipped payment can knock 100 points off your score! It is a lot harder to get it back up afterwards. To keep on top of your bill, it's wise to track your credit account online and send in a check before the card's cycle ends. Some unscrupulous companies send your bill very near the due date, hoping you will be late so they can tack on fees.
4) Piggyback on better credit:
If your husband or parent has great credit (and trusts you) ask them to make you an authorized user on their credit card. Authorized users don't share the liability for the debt, but the positive payment history gets factored into their score. Also, you will benefit from a boost in available credit.
5) Curb your credit cravings:
When applying for a new card, you're intending to take on new debt. This can raise your risk as a borrower, and can cause a 5 to 10 point drop in your score. Wait a few months before applying for a loan after a new card, to show your responsibility.
6) Remove errors:
Your credit report affects your credit score. Up to 80% of reports have one error. You can get a free report annually from all three of the credit bureaus. Pulling a different one every 4 months can help keep errors in check. Visit annualcreditreport.com for your free reports. If you find any mistakes, send bureaus the correct information.
6) Don't become plastic shy:
Going "cash only" won't improve your score. Only by continuous responsible usage can your score improve. If you hit your limit, your score can drop 30 points in one month, but if you keep your balance below 10% of the limit, you can restore your score.
Keep up the good work and you could sail past 760 in no time!