If “saving more money” is one of your financial resolutions this year, then “building a good credit score” should be on your list. If no, then you are not aware of the fact that, a good credit score helps people to save thousands of dollars during the lifetime.
Building a good credit score is a grand goal, but for achieving this goal, you should know the perfect credit score and the method to achieve it. Thus, you can secure the three digit FICO score that will help you to save money in every aspect of your life.
However, credit score starts from 300 and rise up to 850, which is known as a perfect credit score. Scoring above 750 should be your target. For this, you need to follow some tips. Read on to know more about the tips that can help you to open the door of 800 credit score:
1. Pay your bills on time
Do you know that one late payment can make your credit score low? Remember, once the collector starts ringing your phone due to several unpaid bills, it’ll lower your credit score by about 100 points. So, you must be regular in making your payments to maintain a good credit score.
2. Try to lower your credit card balance
The simple math is, once your credit card balance increases, the credit score will automatically get affected. So, you must try to keep your credit card balance within 30% of the credit limit. Thus, it’ll help you to regain a good credit score.
3. Pay off your debt
Having too much debt will affect your credit score negatively. It will lower your credit points. So, you should try to pay off your debts as soon as possible.
Read more - Save or pay off debt first: Which one makes sense?
4. Review your credit report regularly
Are you sure that your credit report contains no error? If no, then you may not be a regular credit report checker. This negligence can cost you dearly in the near future. Because, a single error in the credit report can significantly drop the credit score. It is advisable to review the credit report at regular intervals. Make sure you correct the dispute on the report after identifying any error.
5. Try to make multiple payments
You can boost your credit score by making periodic payments throughout the month. So, start saving as much as possible to pay off your highest interest debt fast. It will boost the credit score.
6. Too many credit cards! No-no
Don’t apply for too many plastics when you apply for a new credit, the score will decrease. Rather, go for a secured credit card so that the lender can find you as a risk-free borrower. Thus, your credit score will get boosted while you make your loan payments on a regular basis.
7. Keep old accounts open
Do you know that as per the FICO score, 15% of your credit score is based on the length of the credit history? So, you must not close your old credit cards, which have established a part of your credit history. Keep the accounts open and try to use as less as possible. It will help to build up a better debt-to-credit ratio that makes up 30% of your credit score.
8. Know where to get credit reports
Remember, all of your credit scores are not alike. The creditors pull reports from the three major credit bureaus - Experian, Equifax and the TransUnion. All of their reports may not be properly updated, and thus, your FICO score may differ. So, you must ask for free credit report and check your report carefully with particular focus on credit score. You can get free credit report from annualcreditreport.com, and myfico.com as well.
9. Request your creditor for PFD
If you made regular payments and missed your payments recently, then you can apply for pay-for-delete or PFD. You need to talk to your creditors for removing the negative listing from your credit report. If your creditors agree, then the negative listings may get erased. This will help to repair your credit.
If you need one sample PFD letter, then click here.
Final thoughts
Having bad credit makes things worse and more expensive as well. It hampers your prospects of obtaining loan, job, rent and new credit, etc. However, building a good credit score is not an easy task. You can’t build a good credit score within a few days. It requires a lot of patience and discipline. You need to do the right thing at the right time to achieve an excellent credit score.
Don’t miss out - 5 Things People With Good Credit Avoid
