Your FICO score, or credit score, can influence your life in a number of ways. From determining whether you get a credit card to affecting the types of property you can rent or buy, credit scores have big effects. Obviously, it is important to raise your FICO score as much as possible, but a lot of people have misconceptions about how to do this.
The easiest way to raise your credit score is to get a credit report and check it for errors. You can get your credit report from a few different companies, and it will list data related to your past credit. Check to make sure this information is correct. Sometimes the credit companies make mistakes, and you can instantly improve your FICO score by simply alerting them to the errors.
Assuming your credit report is accurate, there are still a few different ways to improve it. The most obvious is to reduce the amount of debt you owe. The amount of debt you have is a huge determiner in your FICO score, and reducing that debt is important.
One of the most unique aspects of your credit score, though, is that the ratio of debt to available credit is just as important as total debt owed. Thus, you can improve your FICO score by actually obtaining more credit. You have to be careful here, since you don’t want to get another credit card and simply rack up debt. If you can responsibly use the credit card and immediately pay off things you buy with it, however, you can increase your debt to credit ratio, ultimately improving your FICO score.
Don’t apply for too much credit, however. When you apply for credit, companies get access to your credit report. If your credit is run too many times in a short period of time, your score drops. You can open new accounts, but don’t go crazy applying for too much credit.
If you cannot open up new credit accounts, you can always try to increase the limits on your current cards. Even if you don’t plan to use the extra credit, it will improve the debt to credit ratio and increase your FICO score. If you have a history of timely payments with a company, they will be more likely to provide you with a greater amount of credit.
Another way to improve your FICO score is to set up payment reminders. A big part of the score is your past payment history, so you never want to miss a payment. In addition to racking up fees and going into more debt, missing payments hinders your FICO score in a big way. By setting up payment reminders, you will never miss a payment simply because you forget about it.
If you do miss a payment, don’t panic. Your credit score will likely drop at first, but you can raise it back up by getting current with your payments and continuing to make them in the future. Recent payments and debt count way more than those further in the past, so the key to obtaining a great FICO score is often just being consistent.
If your debt is piling up too much and you simply cannot pay it off, try to consolidate it. By consolidating your debt, you can get it all put into a single account, and often times this amount is lower than the total from individual credit cards. Debt consolidation can help you get out of debt completely, or at least make payment more manageable.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.