Your credit score is incredibly important because we buy a lot of things on credit. Today, the average American household has $132,529 of debt from mortgages, auto loans, student loans, and credit cards. Every time you take out a new credit agreement your credit score is affected. Someone with a great FICO score of 800 or more is considered low risk. Anyone with a score between 740 and 799 is considered “very good”, while scores between 670 and 739 are considered “good”. A “fair” score is between 580 and 669, but anyone with a score of 579 or lower will need help to boost their credit score.
Check for Errors
If you have a lower score than you’d expect, there might be an issue with your credit report. If you’re suspicious that your report is wrong, check with each of the three credit reporting agencies to see if any list incorrect information. Errors happen quite often. In fact, 26% of participants in a recent study by the Federal Trade Commission (FTC) had at least one issue with their FICO report. If you find mistakes, put in a dispute against any missing or incorrect information with TransUnion, Experian or Equifax.
Pay on Time
Up to 35% of a FICO Score calculation is based on how early bills are paid. Any delinquent payment will harm your credit score, even if it’s only a few days late. To make sure you pay on time, use payment reminders through your bank’s online portal or enroll for automatic payments through a credit card. Remember it can take up to three business days for an online or phone payment to go through, so consider that when making a payment.
Reducing the amount you owe is another way to improve your score. Paying off debt rather than moving it from one lender to another is the best way of increasing your FICO score. To do this, make a payment plan that puts most of your budget against the highest interest credit cards first while maintaining minimum payments on your other accounts, and you’ll find your liabilities decrease while your credit score increases.
Building a Credit Score
Taking out several credit cards and installment loans and paying them off in time will rebuild your credit score quickly. You’ll be showing lenders that you’re a responsible borrower. If you have several credit cards already, don’t close the ones you’re no longer using. Closed accounts show up on your credit report and may be considered when calculating your credit score, so keep them open, use them and pay off the balance, and you’ll boost your credit score.
To Consider Before Your Purchase
Don’t rely on the information you see on one credit report. You need to check all three because lenders will when they decide whether you’re a good or bad credit risk.
- Everyone is entitled to free credit reports from each of the nationwide credit bureaus each year.
- If you need to make a complaint about a credit agency, you can write to Consumer Financial Protection Bureau (CFPB).
What Do They Say on Other Sites
“I find the usage very professional, neat, honest and totally simple to use in finding out your overall status in getting various kinds of commercial credits. It is a very fantastic experience.” (Dada Keshinro reviewing Experian on Trustpilot)
“Transunion and Experian were pure Hell…However, Equifax was truly quite amazing.” (Judah Kessler reviewing Equifax on Trustpilot)
Any thoughts? Let us know your comments!
The site isn't responsible for the opinions expressed by third parties, delegating any legal responsibility to them.