3 steps to boost your credit score
Life is short and most people don’t want to spend hours of theirs figuring out the ins and outs of their finances. Fortunately for these people, the #financefriday blog post series aims to provide personal finance hacks, tips and tricks to spare them (and YOU) time and effort that can be spent on more enjoyable pastimes. Lesson number one, how to boost your credit score.
Ever been turned down for a loan? Odds are it was because you had a low credit score. Credit scores are a measure of your financial trustworthiness. Scores range from 300, very bad, to 850, very good. Don’t be seduced by too-good-to-be-true advertising that promises “Bad credit, no credit, no problem!” Instead, follow these 3 steps to boost your credit score over a few short months:
- Pay your bill on time. This is the single biggest factor in determining your credit score.
- Pay down your card balances. The ratio of how much credit you are using versus how much you have available is also a large determinant of your score.
- Don’t close old credit accounts. The average length of your credit history is another input in the credit score calculation.
Take a look at the following infographic from www.myfico.com for a full breakdown of how credit scores are calculated (feel free to browse the site for much more good stuff).
Want more tips? Try these on for size:
- Call your credit card providers and ask for two things: 1) a rate decrease, and 2) a credit line increase. If you are a longer-term customer who pays on time and has a steady income, credit card companies will often be happy to throw you a bone.
- Never pay for your credit score. Despite the catchy jingle, freecreditreport.com will charge you $20 a month to get your score. www.Mint.com will get it to you for free and provide an update once a quarter. If you want a full breakdown of your credit profile (what banks are looking at when you apply for a loan), try www.annualcreditreport.com.