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3 Easy Ways To Increase Your Credit Score
Several credit models can be used for this article, however we are going to focus on the Fair, Isaac Company model. Better known as FICO. A FICO score is one of the main factors used to determine your interest rate and the amount of a loan you will be offered. A good score makes you a more attractive loan then say someone who has a less then stellar credit history. Preserving your FICO score, and improving it, is not difficult, but it may take time. Here are some tips to maintain and improve your score, based on three credit situations. FIRST: You need to get a copy of your credit history You may not have a credit history for several reasons. Maybe you?re a student, maybe you pay all your bills with cash, maybe you have never needed a loan for anything. All this will have an effect on your history. The easiest way to raise your score is acquire a loan, and pay it off on time. In general, installment loans are weighted more heavily than credit cards. In other words, you will improve your credit score faster if you buy goods with an installment loan, rather than acquiring a credit card. A second idea is to take a sum of money, let?s say $1000, and put it in to a 6 month CD at a bank or credit union. Then you in turn go and get an installment loan against the first CD as collateral. The final part of this step is to take your new loan and repeat the process 2 more times at a different bank each time. Now what you have is 3 loans. Pay the minimum payment for 6 months. In the last month, cash out your CDs and pay the loans off. You now have a credit history, and did not go into long term debt to get it. SECOND: Keeping your history in good standing. Good job - you have paid your bills on time, and do not have high credit card debt. Here's some ideas to keep your FICO score as high as possible. You don?t need to close old accounts. (Unless you?re being charged a fee to keep the account open.) Part of the FICO formula is based on the amount of credit available vs. how much you have used. Another thing to be aware of is how you manage your money. Here?s the scenario: you have a $2000 credit card. Every month, you charge about $1800 to that card. And, every month you pay it off. But here's what happens - your credit card company reports your credit information monthly to FICO. However if they report it on the day before you pay it off...the credit agency sees you carry a balance every month. If you can try changing the days you pay off your credit card. THIRD: Repair Your Poor Credit History Ok we all at some point have poor credit history. However you can improve your score. It takes time but can be done. If you?re really unsure of the steps you need to take contact a credit counselor. You can find several good services offered online. The FICO score is most affected by your credit history. To repair a low credit score start paying your bills onetime. In order of value you need to pay your Mortgage, Installment loans, and last your credit cards. The next factor in your FICO score is how you have used your credit. So pay off those credit cards When you?re all done with the rest of things...review your credit report. Get one from all the credit agencies. Look for errors and mistakes. Contact them to see if they can remove them or correct the errors. A strong, healthy, and clean credit score is a major part of your financial world. Keep it clean and don?t risk it. A good score can factor into things you can't imagine. Don?t damage your score if you can help it. Article Directory: http://www.articledashboard.com Doc Schmyz has worked with investors all over the U.S.. His website gives thousands of investors up to date real estate investing information Get more info from across the U.S. on Doc's real estate investing resources page. |
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