Here are 13 baby steps you can take to increase your credit score starting today.
Increasing your credit score, or FICO score, really can be done by taking small steps.
Doing so will improve your credit history and give you more leverage the next time you take out a loan.
A higher FICO score can lower the interest rates and get your better terms on your loans.
Here are 13 baby steps you can take to increase your credit score.
1.
Pull your credit report from all three credit bureaus.
The bureaus are Transunion, Equifax and Experian.
Use a website such as freecreditreport.
com to obtain your reports.
2.
Look for errors on each report.
Use the bureaus websites and they will instruct you how to fix errors by disputing them.
The credit bureaus have to prove that a payment was late and by law must fix these errors within 30 days.
3.
Send letters of explanation if you have short term set-backs that caused poor marks on your credit report.
Maybe you had a temporary job loss or unexpected medical bills.
Attaching a letter of explanation may help increase your credit score.
4.
Check to see if anyone has been using your credit.
This is identity theft and can do great damage to your credit rating.
Report the identity theft and ask that they have these charges removed to increase your FICO score.
5.
Check to see if you have credit cards with small balances that you have overlooked.
Pay these off and close the accounts.
6.
Close credit card accounts that you do not use.
If you shredded these cards to avoid using them, it is important to contact the credit card company and ask them to close the account.
Leaving these accounts open will use up your credit availability and can lower your credit score.
7.
Calculate your debt to income ratio.
This ratio is what determines your available credit and accounts for 30 percent of your total credit score.
Keeping your outstanding debt down to 30 percent, or less of your debt to income ratio will increase your credit score.
8.
Make all credit card and loan payments on time.
If you are a forgetful person, consider having payments automatically deducted from your savings or checking account.
Your payment history makes up 35 percent of your credit score.
9.
Pay down credit cards with high interest rates.
Choose the credit card with the highest interest rate and pay what extra you can until this is paid off.
Take that amount and pay off the next highest interest rate card and so on until you get all your cards paid off.
10.
Make more than the minimum payments.
Whenever possible, pay the credit card in full each month.
This will increase your credit rating and save you money in interest payments.
11.
Refrain from requesting more credit.
Each time someone pulls a credit report can cause your credit rating to lower.
Keeping the inquiries to a minimum can also help you raise your FICO credit.
12.
Open a savings account.
Do what you can to pay yourself each month, even if it is only $25 each month, this will add up and you will collect interest.
13.
Live within your means.
Do not over spend.
Where you may want the latest, newest toy ask yourself if this is the best time to get it.
Try taking the time to save the money to pay cash for that must-have toy.
Following these few suggestions can benefit your financial portfolio and help raise your credit score.