How to Increase Your Credit Score

Silhouette Man Presenting about Credit
May 20, 2020
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Your credit score is more important today than potentially anytime in the past. A great score can help you to borrow money at a reduced cost, qualify for mortgages, valuable credit cards, and can even help you get a job. Did you know that many employers are running full credit checks on potential employees? They want to see how fiscally responsible you might be before they hire you. There are myriad reasons why you want to have a high credit score. A score that stinks won’t help you at all. 

The hard part is increasing a lower score. It won’t happen overnight. Here are some great techniques that anybody can use to help achieve higher scores!

Don’t Carry High Balances on Your Credit Cards 

It’s not the number of credit cards that will hurt you, nor is it the amount you pay every month. It’s the balance on each card that will hurt. If you have maxed out your cards this will negatively affect your score. And applying for new cards will only throw gasoline on the fire, especially if you start to rack up charges on them.

Start to pay off more than your minimum balance. Credit card companies charge insane rates too. The more you pay off each month will result in you having a lower credit card balance. This is a good thing. When you pay down the balance, in effect you are increasing the amount you can borrow. 

Pro Tip: 

If you don’t carry a balance on your cards, you shouldn’t cancel them. Just put them in a drawer and forget about them, even if you don’t plan on using them. 

When you cancel a card, you are taking away potentially available credit. This only lowers the amount you could potentially borrow, and will increase your balance to limit ratio. This lowers credit scores, so don’t do it. 

Apply for New Credit Cards 

The opposite also holds true. If you can increase the available credit available to you, this should help to increase your score. The easiest way is to apply for a new credit card. You, in essence, are adding to your balance to limit ratio. 

But don’t go out and start spending more money on this new shiny credit card. Put it away for a rainy day. 

Do Nothing

Almost all negative credit ratings will fall off given enough time. Even that telephone bill that you never paid 3 years ago, that is sitting on your credit report, will eventually fall off. 

Everything that can affect your credit history has a certain lifespan. Usually, it is about 7 years, but could be up to 10 years. This includes foreclosures, bankruptcies, judgments, and late payments. 

Not many people are aware that these items won’t impact your overall credit score as time goes on. When you replace these negative items with positive payment history, this goes a long way into improving your score. 

However ,after 7 years as these negative items are erased from your credit report, this doesn’t mean you don’t owe that money anymore. Those vendors still have a claim against you. 

Another Pro Tip:

If you’re dying to get a derogatory item off your report, then you should proceed by contacting the collection agency or vendor directly. If enough time has passed, they probably will take pennies on the dollar, and in return will agree to remove the items of your credit report. Be sure though that you do get this in writing before you pay them. 

Hire a Credit Repair Specialist 

You have seen the ads on television and online for specialists that can repair your credit. There is a lot of fraud when it comes to credit repair. And you can do most of it yourself. But if you just don’t have the time, and don’t want to deal with a ton of paperwork, then a specialist can certainly assist you. 

In a nutshell here is how they operate

  • They will pull your credit report so they can view all of the derogatory items 
  • They may dispute inaccuracies on your behalf. 
  • Negotiation with the creditors and collection agencies to have the items removed is another step.

Credit repair companies also have a lot of firepower behind them that you don’t. Among many things, it includes a powerful team of attorneys that do this for a living. 

Remember though that if items are accurate, you will also need to employ a strategy of rebuilding your credit.

  1. Increase your lines of credit
  2. Make timely monthly payments 
  3. Avoid charge-offs and making late payments 
  4. Add more accounts 

What Makes Up The Largest Part of Your Fico Score 

If we knew the largest components that affect your score, we could target those sources first to increase your scores as fast as possible. According to Money Wisdom, the two largest pieces comprise 65% of your score.

  • Be sure and make your payments on time and avoid late payments. You don’t want any vendors reporting that you’re late to the credit bureaus. You might be surprised just how many points one late payment can knock off your fico score. 
  • Don’t max out your credit cards. The credit bureaus know what your credit limits are and how much you have available. 
  • Remember, don’t cancel any credit cards that have zero balances. The bigger capacity you have to spend on your cards, the higher your Fico score will be. 
  • See if your credit card company will increase your line of credit on your card. If your debts are low enough, they just might. And this will increase your balance to limit ratio, thus increasing your score. 

Quick Takeaways 

Higher credit scores help you to qualify for lower interest rates on homes, credit cards and help you to borrow money at a reduced cost. 

  • Pay off your credit cards and increase the balance to limit ratio 
  • Derogatory items will naturally fall off your credit report over time
  • Sometimes it pays to negotiate with the vendors you owe money too
  • This can help increase your Fico score

Andrew Reichek is the owner of Rentkidz and helps people buy and sell houses in Houston, TX.

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How to Level-Up Your Career with Online Certifications

You’ve got extra time indoors with the pandemic keeping everyone at home. So how can you continue to grow your career? Everything is turning virtual, and certifications are no exception. Demonstrate to employers your commitment to growth even while working from home and get a leg up on your competition with these online certifications.

Filing For Bankruptcy: When and the Reasons Why

For many people, bankruptcy can be a daunting proposition. However, when done right, bankruptcy can save you money, preserve your peace of mind, and help you get back on your feet financially.

Tips for Women Veterans Seeking a New Career

For the smoothest and most successful transition possible, women veterans should take advantage of leadership development resources, promptly address any medical issues, and consider the big picture when contemplating relocating for a job. Having a positive attitude is one of the keys to surviving change and thriving in your new career.

Working Remotely or Remote Work? Best Practices to Ensure Maximum Productivity

The pandemic has resulted in a huge rise in the number of remote workers. Working from home is obviously not a new concept, but a lot of people have only recently encountered it for the first time, and most of them have had an initial positive attitude towards this shift.

Personal Finance Tips for Every Business Owner

Financial management is an essential part of every business. As a business owner, you need to keep an eye on your personal accounts while also managing your business finances.

How CRM Can Help Your Business?

CRM, a short form for customer relationship management, is software used by business teams or individuals to optimize communications with customers. But what does CRM do? The software enhances relationship building and management for better customer experience from the first interaction to purchase and return.

How to Be a Better Defense Attorney

How to Be a Better Defense Attorney

Whether it's a passionate courtroom monologue or an insightful cross-examination, the role of a defense attorney is both challenging and rewarding. The path toward becoming a better defense attorney requires a diligent approach to case study, the adoption of new...

How to Make Smarter Career Moves

How to Make Smarter Career Moves

In the dynamic and ever-evolving professional world, making smarter career moves is essential to achieve long-term success and fulfillment. Whether you are an aspiring entrepreneur or a seasoned business leader, strategic decision-making can significantly impact your...

The Most Popular Commission-Based Careers

The Most Popular Commission-Based Careers

A career based on commission offers a distinct opportunity for those who enjoy the thrill of the chase, are self-motivated, and thrive when helping others achieve their goals. Here are three of the most popular commission-based careers that women are making their mark...

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Recent Posts

Boost Your Local Business: 21 Effective Local SEO Tips

Boost Your Local Business: 21 Effective Local SEO Tips

Opening a local business takes a lot of effort and investment in terms of time and money. However, it is not enough to have a physical address and hope for customers to come flooding in. It is crucial to optimise your local business’s online presence by using effective local SEO strategies. Local SEO is the process of optimising your website and online presence to attract more traffic and customers from local search queries. In this blog post, I’ll dive into 21 effective local SEO tips to help boost your local business.

Evolving Your Small Business to Avoid Disaster

Evolving Your Small Business to Avoid Disaster

Meet Adil Altaf, a passionate author, leisure traveler and a budding entrepreneur with an insatiable curiosity for life’s mysteries, Adil finds inspiration in the wonders of science, the marvels of nature, and the intricacies of human existence

Video On Demand Vs Live Streaming: Top Benefits, Uses & Options

Video On Demand Vs Live Streaming: Top Benefits, Uses & Options

VOD and Live Streaming are essential in digital media. VOD is convenient and diverse, while Live Streaming offers real-time engagement and monetization. VOD app development adds to the landscape. Knowing their differences empowers viewers and creators in the digital era.

How to Avoid Afternoon Crashes at the Office

How to Avoid Afternoon Crashes at the Office

Productivity is key in the office environment, especially for those in leadership roles. However, many professionals experience the common afternoon crash, a period of fatigue that typically hits after lunch and can severely impact productivity. Understanding the...

Fitness Strategies For Busy People To Stay Healthy

Fitness Strategies For Busy People To Stay Healthy

Being busy doesn’t mean we can’t stay healthy. Exercise can help prevent future health issues, even with a busy schedule. The best part is that effective exercise doesn’t have to be complicated and can be done in a short amount of time.