Want better credit? Not sure how to get it? If so, you’re not alone. According to CNBC, a shocking number of Americans either have incorrect or little knowledge about what it takes to achieve excellent credit. Not to fear, ScoreShuttle is here with 5 tips you can do now to help you improve your scores.
1. Always Pay Your Bills on Time
Did you know that a single 30-day or more late payment could drop your score by as much as 90 to 110 points?! This surprising information from Equifax is based on FICO data from a consumer with a 780 and no other missed payments on any credit account. The exact score impact you could experience from a late payment may vary. However, staying current on your bills is great way to avoid a potential drop. Here are some tips to stay on track:
- Set up auto-pay so you never miss a due date.
- If auto-pay isn’t an option, schedule calendar reminders before each bill is due.
- If you can’t afford your payments, whatever you do, don’t default! A default could drastically decrease your score and can stay on your report for up to 7 years!
If bills are a problem, call your lender(s) and ask if they offer internal hardship assistance. Programs such as this can help you reduce your monthly payments until you’re able to get back on your feet. It’s not a guarantee, but you might be surprised to learn how many businesses are actually willing to work with you during a time of need.
2. Correct Report Errors
Are you sitting down? Good, because a whopping 79% of credit reports may contain at least one error! Inaccurate claims, misleading data, or downright false items can all affect your creditworthiness.
If you’re not sure what’s listed on your report, ScoreShuttle can help. The ScoreShuttle software analyzes your reports and gives you the ability to challenge incorrect information, digitally. Pending the amount and level of errors potentially listed, removing them could help you increase your score. To find out if credit errors are hurting your scores, click below to see your current report.
3. Stay Under a 30% Card Utilization Rate
Here’s how it works. If you have credit cards, ideally you’ll want to keep a balance at, or under, 30% of your credit limit each month. For example, if you have a credit limit of let’s say, $1,000, you should keep a revolving balance of $300 (aka 30%) or less. Here’s why. The more unused, available credit you have on hand, the more appealing you may be to potential lenders. Maintaining a low utilization rate shows that just because the funds are available to you, doesn’t mean that you’re going to spend every penny of it.
4. Request an Increase in Your Credit Limit
If you have a track record of successful payments, try calling your credit card company and request an increase in your available credit limit. As we mentioned in tip #3, even if you don’t use the additional credit, simply having it in your name may demonstrate a sense of financial responsibility and could help your scores.
5. Diversify Your Credit Profile
Being in good standing on a single loan or credit card is a great start. However, if you’re looking to improve your credit, you might need to diversify your profile. Having a mixture of credit cards, student loans, installment loans (i.e. a car loan, personal loan, mortgage, etc.) may help you boost your score. The key is to have different forms of credit that are all in good standing. That said, opening up 12 new credit cards or getting a loan that you can’t afford is not the trick. For a higher score results, you should have a combination of the various forms of credit and debt listed above, paired with a history of successful payments.
To sum up the score boosters we just learned, here’s a quick recap…