Credit Score - 14 Steps to a
high credit score
Follow These 14 Free Steps to a Credit Score of 800 or More
Do you want
the best terms for the financing of your new car
purchase? re you tired of being
turned down because you are a credit risk? Are
first time home buyer that wants the absolute best interest rate on your
mortgage If you answered yes to
any of these questions, then you need to raise
your credit score into the excellent
range of 750 or higher.
Developed by Fair Isaac Corporation, a
publicly traded company, credit score is
represented by a number between 300 and 850. The
median American average credit score is 725.
Credit scores of 600 and below represent "poor"
credit. 720 and above is considered to be a good
credit score. Credit scores in excess of 750 are
considered to be excellent. This credit scoring
system will soon be outdated as the 3 major
credit bureaus have recently introduced a new
system called VantageScore. Click on the new
flash above for more info.
While Fair Isaac Inc. will not reveal the
exact algorithm used to calculate a credit
score, Fair Isaac has provided some details used
in determining credit scores. The makeup and
weighting of each component in a credit score is
as follows: punctuality of previous payment
history - 35%, the ratio of current debt to
current available credit - 30%, length of credit
accounts and credit history - 15%, types of
credit accounts used - 10%, recent requests of
credit history and recently obtained credit -
Recently, credit scores are being used in
ways above and beyond the traditional lending
decision. In the fall of 2004, a Texas utility
company began using credit scores to
individually set prices for electricity. Some
insurance companies are now using credit scores
to rate the quality of potential customers. Many
employers are now also using credit scores as
part of their decision-making process in hiring
new applicants. We see these trends as
continuing and expanding, making a high credit
score even more essential with each passing
year. It is probable that a good credit score
will be required in order to get
down payment assistance. Now is the time to start taking steps to
get your credit score into the excellent range.
If you are looking to increase your credit
score to 800 or more, you have come to the right
place. Follow and complete these 14 steps
religiously and you will improve your credit
score to 800 or more. Changes take time. Don't
expect to go from a 600 credit score to a 750
credit score in one month. If you have a credit
history of regularly making late payments on
multiple accounts, one payment on time isn't
going to overcome all the previous negative
impacts. However, the more you follow these
steps, the more your credit score will rise over
Here are your 14 steps to a
credit score of 800 or more. Remember to
bookmark this page so you can refer back to it
often to check your progress as well as use all
the helpful resources on our various resource
pages. For the most recent credit score
information and advice,
join our free newsletter.
1. Pay your bills on time.
The largest component of your credit score is your payment
history. As such, the most important step in getting and keeping
a high credit score is to pay your bills on time. If you have a
low credit score because of late payments in the past, you can
immediately start to raise your credit score by making your loan
payments on time. To get and keep a high credit score, you
follow this rule religiously. If you currently have blemishes on
your credit report from previous late payments, it is
and advisable to negotiate with the lender or collector to
remove the late payments from your credit report. The
and more local the lender is, the more likely you will be to
succeed in your negotiations. This is the most
effective way to
raise your credit score significantly in a short period of time.
Collection agencies are usually paid on
commission and will
aggressively try every avenue to collect a debt, and thus get
paid for their work. To improve
your credit score be sure to get
your agreement in writing. You can be verbally promised anything
by a collection
agent, but trying to get him to enforce a verbal
promise after you have paid will likely be next to impossible.
Negotiation is an art, not a science. There
are no exact rules to follow that guarantee success. However,
there are some
things you can do that are more likely to
bring success and that higher credit score that you are seeking.
courteous and polite. Collectors work in a tension
filled environment and constantly deal in conflict. Be extra
polite and appeal to their human decency. They may look
favorable on you and remove items without need for
Businesses also will be likely to remove negative elements from
your credit report if it is their best interest.
significant your account , the more they have to lose, and the
more likely they are to respond favorably.
When negotiating to
remove derogatory information off your credit report, ask what
it will take and what can be
done. Often times the lender will
offer a solution that hasn't occurred to you. Think outside the
box in this process
and your credit score will reap the rewards.
If you are not successful at removing the negative items, you
may want to
hire a specialist.
The lawyers at Lexington Law specialize in doing just that.
2. Learn to spend less than you can
Amounts you owe is the second largest component used in
determining your credit score. If you consistently spend all
you can afford, your amounts owed will be higher, your
credit ratio of debt vs. available credit will suffer, and
score will be lowered. To get and keep a very
high credit score, you must learn to not only spend within
your means, but
spend even less. Overall, not only will you
raise your credit score by doing this, but you will have
extra income available to
save and invest for your future.
3. Have the credit reporting
agencies remove incorrect information.
Obviously, if there is incorrect information in your credit
report that is to your advantage, don't ask the credit
agency to remove it. However, very rarely is
incorrect information beneficial to you. Periodically check
your credit report
to verify accuracy of content. If there
is incorrect information
that negatively affects your credit
score, contact the credit reporting agency and have it
4. Don't apply for credit too
Multiple credit inquiries in a short period of time will
lower your credit score, as will new credit. Remember this
when you are out shopping and the department store
clerk offers a $5.00 discount for applying for a new store
The discount seems tempting, and you may want
the new card, but don't do this too often as it will lower
your credit score.
Try to keep your new credit inquiries to
3 to 4 times per year. This will help boost your credit
score. Remember: a higher
credit score will result in
reduced costs to refinance your mortgage.
5. Keep your credit card balances
Keeping all of your credit card balances below the 50%
threshold of available credit will raise your credit score.
all of those balances below the 25% threshold will
improve your credit score even more. If you have an upcoming
loan request, financing a new home purchase for
instance, please see the next step for a quick solution to
You should take action at least 60 days in
advance of the loan request to allow time for the
information to get reported.
Don't try to improve your
credit score 3 or 4 days before you apply for a big loan.
Take action early.
6. Ask for an increase in your
One of the determining factors used to compute your credit
score is the ratio of outstanding credit to available
The lower this ratio is, the more it will help to
raise your credit score. For this reason, you should ask the
of your current credit cards to raise your credit
limit on each card. Be careful, however, to only ask those
will grant your request without running a new
credit report on you. Many credit card companies will
automatically grant a
request to raise your credit limit
every 6 months provided there were no late payments in the
preceding 6 month period.
Remember, though, frequent credit
inquiries will lower your credit score, so ask first if a
request for a higher credit limit will
require a new credit
7. Transfer balances if necessary.
It is quite normal for many people to carry a high credit
card balance on a low- or no-interest credit card, and
have a very low or no balance on their high
interest credit cards. While this makes perfect sense from a
from a credit score standpoint it
doesn't. Let's say you have 4 credit cards, each with a
$10,000 limit. Three of those cards
have a zero balance, and
the fourth has an $8,000.00 balance. This will lower your
credit score because one of the cards
is at an 80%
outstanding credit to available credit ratio. To get a
higher credit score, you should transfer the balance
among all 4 cards, resulting in a 20% ratio on each card.
This one simple step will give you a higher credit score.
8. Establish long-term accounts.
Roughly 10% of the factors that are used to determine your
credit score relate to the length of time you've had your
accounts. It is quite common for people to hop from credit
card company to credit card company constantly seeking to
take advantage of a low introductory interest rate. Again,
this makes sense from a financial point of view, but it can
lead to a lower credit score. You will be awarded a higher
credit score if your accounts have been open and active
a longer period of time. Multiple new accounts lower your
score, whereas a stable number of credit accounts that
been used for years upon years will significantly raise your
9. Pay more than the minimum payments.
The credit score formula was designed to measure the
likelihood of a borrower to pay back a loan. If you are
making the minimum payments on your credit accounts,
how likely is it that you have the financial capacity to
increase your debt load with a new loan? Alternatively, if
you are making more than the minimum payments, isn't
facto evidence that there are extra funds in your budget?
One of the surest signs that a borrower has
limit of his debt load capacity is a pattern of merely
paying the absolute minimum due. Double up on your
to raise your credit score.
10. Don't have any credit cards maxed out.
One item that has significant negative consequences on your
credit score is using all of your available credit. If you
want a high credit score, you simply must not use all of the
available credit on any of your credit cards. Even worse
than reaching your credit limit on any card is actually
going over your limit. Not only will you likely incur
fees, you will really lower your credit score.
Keep those balances low for a high credit score.
11. Have an emergency fund.
If you establish a sizeable emergency fund, this will not
directly raise or lower your credit score. However, the
of these 14 steps is to help you get and maintain
indefinitely a high credit score. Without an emergency fund,
credit score could severely suffer in the event of a
financial emergency such as an accident or extended illness.
have an emergency fund to draw on in time of need,
this will eliminate the temptation or necessity of having to
the available credit lines on your credit cards. An
emergency fund is really an umbrella of safety to protect
12. Have a balanced mix of
different credit types.
While this step is not going to be responsible for huge
increases in your credit score, it will help improve it
If you have 10 credit accounts on your credit
report, it is better to have several different types of
credit such as a
home mortgage, an auto loan, and a few
department store cards and a VISA and MasterCard. You would
higher with this balanced mix of credit types than if
all 10 accounts were credit accounts at various department
stores. Having several consumer finance company credit
accounts will negatively effect your credit score.
13. Don't close unused accounts.
One of the determining factors that effects your credit
score is the length of time you've had each account. While
you might not want to continue to pay an annual fee on a
credit card that you opened when you were in college,
annual fee might be worth the resulting benefits to your
credit score from having a credit account that is
decade old. The older an account is, the more it will boost
your credit score (provided, of course, that the
a good payment history).
14. Borrow great credit from a relative.
You may be wondering how it is possible to borrow credit
from another person. This is easy to do and is especially
useful to young adults who have yet to establish credit
(although anyone can benefit from this technique regardless
of age). If you have a relative or close friend with
excellent credit history, have them add you to one of their
card accounts. Ideally, they should add you to an
account that they have used for years, has a high credit
or no balance, and has a perfect payment history
with not one late payment. When you are added on this
the payment history of this account is also
recorded on your credit report because you share the
You now have a great credit reference on
your account. This is perfectly legal and can be used to
your credit score.
Have a low credit score?
Are you a
first time home buyer?
Additional Credit Score
News Flash - Three Major Credit Bureaus Adopt New Credit Scoring System
Tuesday, March 14, 2006 3:03
Farewell to Fair Isaac?
Is this the end the end of the road for the
FICO credit scoring formula developed by Fair Isaac? The
nations' 3 credit reporting agencies announced on Tuesday, March
14, 2006 that they have jointly created a new credit scoring
system called "VantageScore". The primary benefit of the new
scoring system is that it provides a consistent credit scoring
model that is identical for all three credit reporting bureaus.
In the past each credit bureau has used its
own proprietary formula for creating its own credit score.
This caused large variations in credit scores among the three bureaus.
With the new VantageScore system, a single, unified formula will
be used by each of the three credit reporting agencies. This
will result in virtually identical credit scores across all
three of the credit bureaus. The only minor differences will be
caused by the slightly different data that has been collected by
each of the agencies. However, for the first time the formula to
interpret that data with be identical across all three bureaus.
Lenders as well as consumers will be able to obtain their credit
score from any of the 3 bureaus, and can be confident the credit
score would be nearly identical at the other two credit bureaus.
The FICO credit scoring system developed by
Fair Isaac Inc, a publicly traded company based in Minneapolis,
was represented by a 3-digit number between 300 and 850. The new VantageScore credit score system uses the same 3-digit result,
however the numbers will range from 501 to 990. Under the old
FICO credit score system good credit was considered to be 720,
poor credit was considered to be a credit score under 600, and
excellent credit was represented by a credit score of 750 or
above. Under the new system, each 100 point range will be
grouped on the familiar academic scale used in the school
For instance, 501 to 600 will represent very
poor credit and would be considered an "F". A credit score of
601 to 700 would represent poor credit and would equate to a
"D". A credit score of 701 to 800 would be average and equate to
a "C". A credit score of 801 to 900 would represent an above
average credit score and would equate to a "B". And a credit
score in the range of 901 to 990 would be an excellent credit
score and equate to an "A".
Christine Carter, owner of
website that provides advice and strategies for substantially
improving your credit score, sates "Although the exact details
of the formula and weighting of the content of the new credit
scoring system have not yet been released, the same solid
principles practiced to get a high credit score under the old
system will be useful to build a high credit score using the new
credit score system."
Comments by David Rubinger, spokesman for
Equifax, echoed that same theme, stating "the new score would
reflect a consumer's frequency of borrowing, delinquency in
paying bills, and other content." He also stated that the new
credit score was expected to reduce the variance in a consumer's
credit score by about 30% compared with what it was under the
old credit scoring system.
Beginning immediately the new credit score is
available to mortgage lenders, banks and credit card companies.
However, the new credit scores will not be available to
consumers until later this summer.
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