How to Raise Your Credit Scores

How to Raise Your Credit Scores

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The behavior of a consumer is prone to change. When a company makes an inquiry, what they get is a “snapshot” of your situation. When you open a charge account, miss a payment, or pay your debt, your score changes. Although the number keeps changing, you need to know what your score is at a particular time and how you can increase it. Each section of credit information carries a different weight when it comes to calculating your credit score.

35% payment history

This is very important as it contributes the largest share. Underpayments, missed payments, late payments, and other related issues are included in this section. Creditors report this kind of information differently (some 10 days after the due date, some after you have missed two payments, etc.). Get to know how your creditor reports information. 

30% outstanding debt

You have a credit limit and you are the determinant of that limit. Your outstanding debt is calculated against unused credit and used to come up with a credit score. Many credit cards increase your credit limit (if you do not use up the available credit).

15% length of credit history

Keeping your account for a long period of time boosts your credit score. The most important thing is to pay off your balances and avoid closing accounts. If you use the same finance resource for different loans you will also help your score.

10% new credit information

New credit shows that you can open credit lines and that your financial situation is great since creditors are willing to finance you. It also shows that you are financially active.

10% credit mix

A mortgage is a loan; so is a credit card and any other account that you can charge groceries or gas to. However, they are not the same type of loans. Their difference is important. Several kinds of credit accounts show credit bureaus that you can handle different types of financing. 

Negative items such as tax aliens, judgments, and bankruptcies can damage your score.  Credit bureaus accumulate all the factors above and use their formula to come up with a number that is your score. The number changes regularly and you should check your credit report on a regular basis.

You can improve a bad credit score by adopting good credit habits, not over-borrowing, paying on time, and keeping low credit balances. Dispute negative items on your report; you can do it yourself or involve a credit repair company. Credit repair involves challenging and verifying inaccurate information. It works to retain the good information and eliminate bad information. 

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