The top lenders use FICO scores to determine
creditworthiness, and they are determined by five factors: - The most important
factors in determining a credit score are payment history, your credit usage,
the age of your credit account, and your mix of new and old inquiries.
The
best way to get the most out of your credit limit is to keep a 30% or less
utilization ratio.
If
you are in need of a credit card, then you should definitely check out recent
post about improving your credit score. I’ve been using the 3 credit reporting
companies (Equifax, Experian, and TransUnion) for years and have had to pay
their annual fees multiple times for their services.
improving your credit score: https://www.creditrepairease.com/how-to-improve-your-credit-score/
Strategies for getting a better credit score
1. Check
Your Credit Reports
Did
you know your creditreports can affect your life? I don’t mean the credit
reports on your credit card statements (although that’s a pretty big deal), I
mean the ones about your finances. And if you’re not paying attention, they can
be a big problem. They may not show up in your credit report, but they do
affect how lenders see you. They can affect how much you can borrow, and thus
how much you pay in interest.
2. Stop
Paying Bill Late
FICO is
the most common credit score used by lenders and it accounts for 90% of top
scores.
Payment
history (35%)
Credit
usage (30%)
Age
of credit accounts (15%)
Credit
mix (10%)
New credit
inquiries (10%)
At
the end of each month, you will almost certainly have a large pile of bills to
pay. If you’ve been paying your bills on time, you probably don’t have any need
to worry about overpaying for a few months. But if you can’t keep up with your
bills — because of a delay, for example — or if you pay late, you can end up in
trouble with the government.
To
improve your credit score, it is important to avoid late payments and not be
carried over to the next due date.
Creating
a paper or digital filing system for monthly bills
Setting
bills and other important reminders
Automatically
paying your bills from your bank account
3. Aim for 30% or less of Credit Utilization
A
credit utilization charge, also called a negative amortization charge, is an
expense that is charged when a borrower’s debt service exceeds its available
credit. A credit utilization ratio is the percentage of the total debt service
costs that are funded by available credit. The higher the ratio, the more money
lenders must pay out in interest and principal to pay off debt.
Keeping
your credit utilization to a manageable level is as easy as making sure you pay
your credit card balances in full each month. If you have no other option, keep
your credit utilization (total outstanding debt) at 30% or less of your total
credit limit. Many homeowners get started with a budget of 10% or less and work
their way up to a more manageable amount.
4. Make it hard to get a new credit
The
credit card companies know what’s best for us. From a consumer perspective,
they’re great. But as the market for credit cards continues to grow, it’s clear
that the credit card companies are running out of room. As a result, they’re
increasingly taking steps to limit consumers’ options for new credit cards.
Hard
inquiries can sometimes be bad for your credit score-but only for as long as a
few months to two years. Hard inquiries are a way for an applicant to make sure
they’re approved for a new credit card, mortgage, auto loan, or some other form
of credit. The occasional hard inquiry will not have much of an effect.
5. Build your credit profile with a thin file
Credit
files can be a really tricky thing to work with, especially when you’re trying
to build one up. It’s not always easy to figure out what credit reporting
institution (CRA) will be the most helpful to your particular situation. But,
as you’ll see, there are a few factors that can help you create the most
success with your credit file, and each of them has a specific benefit for you.
This
program collects financial data that isn’t normally in your credit reports.
includes your banking history and utility payments when calculating your FICO
credit score. It is free to use and designed for those who have a history of
paying other bills on time.
6. Keep Old Accounts Open and Deal With Delinquencies
If
you are a consumer with an old credit card, consider yourself lucky; because
this is a problem that is not likely to happen to you again. In fact, there’s a
chance your account could be closed, and all the benefits of your card could
disappear.
It’s
a real struggle for small businesses to keep track of all of their accounts.
Not only are many of them using different names and different companies, but
some companies also have more than one office. And when they do come across a
delinquent account, what are they supposed to do?
Resource: https://us.bebee.com/producer/what-are-some-tips-for-185WOAjO9rL1
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