8 Tips to Boost Your Credit Score
1.Pay your bills on time
To have a good credit score, means also to pay your bills on time. Credit agencies when calculating your credit score conisder this one of the top criteria and it counts 35% to your overall credit score. On the other hand paying your bills on time also means you dont experience other additional costs as reminder posts which could cost you 10 USD each. It can be very positive simply to set reminedrs, which bill you must pay when, because the bill payments that are delinquent, even by only a few days time frame, can have negative impact to your overall credit score. One way to remind about the dates is simply to fill up a calander or download a personal budgeting app, there are plenty of them around.
2.Work on Paying off your debt
Your total cerdit which is available is known as the open credit utilization. One of the major factors the credit bureau considers in your credit score is the total amount you owe, compared to the total credit available. They usually check your credit card statements and its the best if you never go to the credit card limit or even better if you are not anyway near the credit card limit. Creditors and credit agencies pay close attention to borrowers utilization ratio, the higher the ration, the most difficult is for borrower to give back what he owes on the other hand lower utilization ratio is better and indicates the borrower will most probably pay back credit on time and thus higher credit score.Rule is simple the lower the balance on your credit card, the better credit score.
3.Avoid a new cerdit card application or closing older accounts
The more credit cards you posses, the higher is your credit utilization score. If you want better credit score you should avoid using multiple credit cards, since their limits sum up. Its also worth mentioning that closing your credit card with balance can hurt your credit score and closing your credit card account will not improve your credit score.
4.Pay more than the owe each month
If you have outstanding debt is important to pay it off regularly and if you pay more than you owe each month, this can have a positive impact on your credit score. If you have more than one credit card debt balance, the best thing is to try to pay off the debt on one card and pay the minimum necessary of others. This can help you reduce your debt on credit cards one by one until you pay your debts in full.
5. Have a good balanced debt standing
Having mixed debt is in many cases better than have only one type of debt.
There are plenty types of credit as: student debt, mortgage loan, bank credit cards, retail credit cards, vehicle loans. According to FICO the clients (borrowers) who have mixed type of credit are more probably to pay their debt on time, than those who have only one type of credit. The credit balance will account 10% of your overall credit score.
6.Get a copy of your credit report
Since your credit score is based on your credit report, you should go for credit report to imrpive your credit score. You can simply order your credit report from three major credit bureaus You can order them on annualcreditreport.com. Go through them to identify which accounts are problematic and try to work towards better score. You should also revise and check if there are errors in the report and dispute them by writing to the bureau agency. According to FICO (Fair Isaac Corporation) the median credit score in the States is 695.
7.Reduce debt to income ratio (DTI)
DTI or Debt To Income ratio is a measure of your monthly debt payment to overall income. Its the measure creditors use to check your ability to pay your debts from your monthly income. DTI is the ratio between your overall debt to monthly income. Higher DTI ratio means that you have probably more debt that you can support with your salary and you posses greater risk to credit borrower.
8.Do not apply for new credits if not really necessary
There are soft and hard credit inquiries. Hard credit inquiries are: auto loan, student loan, credit card, mortgage, business loan. Soft credit inquiries, which do need your permission are: history of employment, background check of renting an apartment. Each time you apply for a new credit, creditors will pull out a hard credit inquiry, so its best to not apply for a new one if its not really necessary.