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Credit Score - 14 Steps to a high credit score

Follow These 14 Free Steps to a Credit Score of 800 or More

News Flash! - Three Major Credit Bureaus Adopt New Credit Scoring System


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 you a 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 This credit scoring system will soon be outdated as the 3 major credit bureaus have recently introduced a new system called VantageScore.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 - 10%.

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 time.

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
must follow this rule religiously. If you currently have blemishes on your credit report from previous late payments, it is
possible and advisable to negotiate with the lender or collector to remove the late payments from your credit report. The
smaller 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. First, be
courteous and polite. Collectors work in a tension filled environment and constantly deal in conflict. Be extra kind and
polite and appeal to their human decency. They may look favorable on you and remove items without need for
negotiation. Businesses also will be likely to remove negative elements from your credit report if it is their best interest.
The more 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 afford.
Amounts you owe is the second largest component used in determining your credit score. If you consistently spend all that
you can afford, your amounts owed will be higher, your credit ratio of debt vs. available credit will suffer, and your credit
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 reporting
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 removed.

4. Don't apply for credit too often.
Multiple credit inquiries in a short period of time will lower your credit score, as will new credit. Remember this point
when you are out shopping and the department store clerk offers a $5.00 discount for applying for a new store credit card.
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 low.
Keeping all of your credit card balances below the 50% threshold of available credit will raise your credit score. Keeping
all of those balances below the 25% threshold will improve your credit score even more. If you have an upcoming large
loan request, financing a new home purchase for instance, please see the next step for a quick solution to this problem.
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 credit lines.
One of the determining factors used to compute your credit score is the ratio of outstanding credit to available credit.
The lower this ratio is, the more it will help to raise your credit score. For this reason, you should ask the providers
of your current credit cards to raise your credit limit on each card. Be careful, however, to only ask those companies that
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 check.

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 simultaneously
have a very low or no balance on their high interest credit cards. While this makes perfect sense from a financial standpoint,
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
evenly 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
for a longer period of time. Multiple new accounts lower your score, whereas a stable number of credit accounts that
have been used for years upon years will significantly raise your credit score.

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 simply
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
that de facto evidence that there are extra funds in your budget? One of the surest signs that a borrower has
reached the limit of his debt load capacity is a pattern of merely paying the absolute minimum due. Double up on your
payments 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 overlimit
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 purpose
of these 14 steps is to help you get and maintain indefinitely a high credit score. Without an emergency fund, your
credit score could severely suffer in the event of a financial emergency such as an accident or extended illness. If you
have an emergency fund to draw on in time of need, this will eliminate the temptation or necessity of having to tap
the available credit lines on your credit cards. An emergency fund is really an umbrella of safety to protect your high
credit score.

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 nonetheless.
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 score
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,
the annual fee might be worth the resulting benefits to your credit score from having a credit account that is
over a decade old. The older an account is, the more it will boost your credit score (provided, of course, that the
account has 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 credit
card accounts. Ideally, they should add you to an account that they have used for years, has a high credit limit, low
or no balance, and has a perfect payment history with not one late payment. When you are added on this account,
the payment history of this account is also recorded on your credit report because you share the account. Presto!
You now have a great credit reference on your account. This is perfectly legal and can be used to immediately raise
your credit score.

Have a low credit score?

Are you a first time home buyer?

Additional Credit Score Related Topics:

News Flash - Three Major Credit Bureaus Adopt New Credit Scoring System

Tuesday, March 14, 2006 3:03 pm ET

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 system.

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, a 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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