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Ways to increase credit rating to improve FICO

 (Session 1)

1. Obtain a credit card if you don’t have any

Having and using a credit card or two can really build your credit scores. If you cannot get a regular credit card, try a secured credit card, where the bank gives you a credit line equal to the deposit you make. Look for a card that reports to all three credit agencies. If you can carry a small balance to the next month is better ($20)

2. Add an installment loan (like an auto loan)

You will get better results in your scores if you show that you are handling revolving (credit cards) and installment (auto, mortgages and student loans).

3. Pay down your credit cards

Paying off or paying down your loans especially credit cards will increase your score. Your total balances and individual balances should be below 30% of your limits. Getting the balances under 10% of your limits is even better. Try to pay down the cards that are closest to their limits first or divide the balances between your cards to keep them under 30%.

4. Make sure the cards report your limits to the bureaus

Some companies like American express do not report your limits to the 3 bureaus. Call them and find out. When they don’t report your limits the bureaus use your highest balances as your limit which creates 100% ratio and that kills your score.

5-Pay your bills on time

Late payments, even if only a few days and can have a big negative impact on your credit score. If you missed some payments, get current and stay on time. The longer you pay the bills on time (after being late), the more your score should increase. You can also Setup Payment alerts and set up payments automatically before the due dates (you can call your card issuers and find out when they report to the agencies and make sure to pay before that.

 

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