A good credit score can take you months or even years to develop. By being careful with your every financial move so that the positive points just keep adding up while the negative points are kept to a minimum is the way to go. Remember, after all that hard work and sacrifice, a tiny mistake can damage everything you’ve worked for fairly easily. If your credit score is tarnished, a lot of time and effort is needed to repair it and bring it back to something more desirable. A system comprised of five categories for computing credit scores has been devised by the Fair Isaac Corporation, developers of the popular FICO score. Improving your rating requires work on your payment history, your debt amount, your credit history length, the types of credit you utilize and your new credit amount.
Instructions
1 Make all of your payments on time
Your debt payment history comprises a largest portion of your credit score, 35 percent to be exact. Making sure you pay on time every time is the single best way to improve your credit score. Consistent on-time payments will not give your score a sudden boost but will, gradually, improve the number over time.
2 Age out your credit history.
Delinquent accounts or negative public records, such as bankruptcy can take between seven and ten years to be expunged from your history but, as time advances, the negative effects these records have on your credit score will diminish.
3 Pay off your debts.
Your FICO score is the second-largest factor, comprising 30 percent of the overall number. Lowering your total debt amount will help enhance your credit score. The percentage of your available credit at any given time, known as your credit utilization, is also part of this equation. The lower your credit utilization percentage is the higher your credit score will be.
4 Keeping your old accounts open is good.
Your credit history length makes up 15 percent of your FICO score and the longer your accounts are in good standing they should be kept open. Closed accounts can remain on your credit report for a long time and, once they are expunged, the length of time you had them as well as the payment history has no more influence on your score. Plus, closing accounts may hurt your credit score by having your credit utilization percentage go up.
5 New credit applications should be avoided.
Applying for new credit will reflect on our credit score and will be part of your history for two years. 10 percent of your FICO score is comprised of new credit, so new inquiries on credit lines should be avoided at all cost so as not to hurt your poor credit score further.
6 Types of account.
Your credit types make up 10 percent of your FICO score having an assorted mixture of different account types can help improve your score. Only having credit cards on your credit report is not much of an advantage but adding a personal loan or an installment loan, maybe a car or home loan, will benefit your score.
Following these simple steps can help you out a lot in terms of credit rating improvement. And having a good credit score will have a positive effect on your overall financial well-being, making life that much easier for you.