Improving your credit score can have a dramatic impact on your life in many different ways, so it’s worth working to get as high a score as possible. Don’t be stuck with a not-so-great credit score. Learn how to take it above 800 to get the best deals and rates.
Time for Action
Your credit score probably doesn’t get all the attention it deserves. Most people tend to accept that their score is what it is, and do their best to work around it. But that attitude can not only be very expensive, it can cause you to miss out on wonderful life opportunities.
Imagine you find the home of your dreams, only to discover you can’t get the mortgage you need to purchase it. Or what if your debt interest rates are so high they force you into bankruptcy? That would suck really bad, right?
These kind of problems happen every day, and often a poor credit score is at the heart of the problem. Improving your credit score is vitally important because it impacts so many areas of your life. Add just 100 points to your credit score and your life will become easier in so many ways.
Best of all, improving your credit score is not that difficult. Even if you have some big strikes against you for late payments and other issues, there is still so much you can do to improve the picture.
The big problem is that most people don’t know what to do that will make a difference. But you are about to find out! Here are eight easy steps you can follow to take your credit score up into the stratosphere.
1. Check for Report Errors
This one sounds just too easy, but you will be amazed at how often this is effective. A 2012 Federal Trade Commission study found that one in four consumers saw errors on their credit reports that could impact their credit scores.
"Mistakes on your credit report could lead to a lower credit score than you actually deserve," says Roger Cowen, founder and president of Cowen Tax Advisory Group in Hartford, Connecticut. "A lower score could make it harder for you to get approved for a credit card, a mortgage or any other type of financing."
So you need to get a copy of your credit report and go through it in detail. Check that all the details are accurate, and that you are not being marked down for problems that don’t exist.
You might think that this step is unnecessary, but the way credit scores are compiled is far from perfect. You may find that a debt you paid off years ago is still listed, or you are being impacted by someone else’s late payments. Of course, you need to get these mistakes cleared up right away. The result - an instant boost in your credit score!
2. Pay Down Revolving Balances
Your aggregate debt and the amounts owed on all credit cards and all installment accounts add up to about a third of your credit score. The biggest factor here is usually the amount currently owed on your credit cards - your revolving balances.
If you want to get a high credit score, you need to reduce your credit card balances to less than 20% of your overall credit card limits. The more you reduce your balances, the greater the impact will be.
In any case, paying down credit card debt as fast as possible is always a good idea. This will typically be your most expensive debt, so you need to get it off your back as quickly as possible. It’s well worth making sacrifices in other areas of your life to cut down those credit card balances.
3. Raise Your Credit Limits
Here’s another quick fix that can make a big difference. Simply call your credit card companies and ask them to raise your credit limits. What could be quicker and easier than that? Surprisingly, this can make a real difference to your credit score.
This seems counter-intuitive. You might think that increasing the amount you can borrow would look like a risk problem for lenders. But the reverse is actually the case. Because this tactic instantly reduces the percentage of revolving debt you are utilizing, it makes you look like a safe bet. Weird, but true!
Here’s an important tip, though. Ask the credit card providers if they can increase your limit with a ‘soft pull.’ This means that you are not making an official application (a hard inquiry), but unofficially asking them to consider an increase. Hard inquiries have a small but significant negative impact on your credit score, so are best avoided if possible.
If you currently have relatively low balances and a good history of making payments, there is an excellent chance that this strategy will be effective.
4. Get a Late Payment Removed
This one might take a little persistence, but if you can pull it off you will get an instant quick win on your credit score. Just a single late payment can tank your credit score by over 100 points, so it’s definitely an area worth focusing on.
The simplest way to get a late payment removed from your report is to call the creditor and ask them nicely if they will remove it. They have the power to make a goodwill adjustment that effectively wipes the payment off the record.
If they are not inclined to cooperate at first, you can offer to sign up for automatic payments in future, in return for an adjustment on this payment. That’s a good deal for the creditors, as they are then assured of getting future payments on time.
If all else fails, you can file a dispute against the late payment, claiming that it was inaccurate. You might get away with it!
5. Charge Small Amounts to Inactive Cards
This is where we get counter-intuitive again. It might seem that clearing your credit card debt down to zero on some cards would be a good thing. It shows that you are a responsible borrower, right?
Nope. The credit card companies don’t see it that way. If an account is inactive, it doesn’t give them any information about your financial activity. It’s actually better to make a small charge to each of these cards occasionally, and then repay the balance promptly.
This not only shows you using credit responsibly, it also means you have a mix of different credit in use. This is a factor in your FICO score, so it makes a difference.
6. Get More Credit
In the crazy world of credit scores, no credit means bad credit. You want to have an active mix of credit that includes both revolving balances and installment payments. Then you need to make all payments as necessary - on time, every time.
The more you do that across different lines of credit, the more faith lenders will have in you. Your credit score will get higher and higher. So an easy way to increase your credit score is to go out and get more credit.
The fastest way to do this is open a new secured credit card. It’s even better if this is reported to the bureaus as an unsecured card. Alternatively, you can yourself to a seasoned trade line. You can be added as a co-signer, which makes you equally responsible for all debt. A better option may be to get added as an authorized user, which means you are not responsible for the debt.
7. Remove a Collection Account
If you want to take your credit score above 800, you need to ensure that you have no collections dragging your score down. If there is a collection showing up on your report, you need to do your best to get this deleted.
However, you should NOT simply pay the amount owed. Instead, you need to negotiate with the collector. Say that you will pay up only if they agree to delete the record. Get this in writing before you pay the money, then follow up to ensure that they keep their end of the deal.
8. Negotiate with Creditors
Lending is a competitive market, and creditors know that you have many options to choose from. So they are often open to negotiating to keep your business. In many cases, they would rather offer you a better deal than see you transfer your business to another lender.
Don’t be afraid to pick up the phone and negotiate with all your lenders. From mortgages to credit cards, you may find that creditors are more accommodating than you expect. Every time you reduce your interest rate by a small amount, you are helping to increase your credit score.
Creditors like regular payments that can be relied on. So you may be able to persuade them to forgive a certain amount of debt in return for making automated payments in the future. Any deal you can get will make a significant difference.
Take Up the 30-Day Challenge
So now you have eight great strategies you can apply immediately to improve your credit score right away. All you have to do is put them into practice. Start now by getting a copy of your current credit score and looking for opportunities to improve.
Get started with this, and you could see a huge difference in your credit score in the next 30 days. And that will make a difference in every aspect of your life, from mortgage applications and car loans, to credit card payments and personal loans. Get onto it now and make your life better!