If you want to know how to get a better FICO credit score then pay off your debts. The amount of debt you have and your payment history make up 65% of your FICO score – almost 2/3rds of your score. When you make all your payments on time you are viewed as a responsible borrower and lenders will offer you favorable credit terms.
They also want to see that you are not overextended and borrowing too much money.
The key to increasing your Experian, Equifax and Transunion credit scores is by paying down what you owe on a timely basis. Do not be late on your payments as this can easily crush your credit score. All your hard work will go down the drain with one 30 day late payment.
You can create a personal budget you can stick with and work on slashing your expenses as much as possible and also work on getting more work to increase your take home pay so you can have more cash to allocate to your debts. Or you can find a second job or do some freelance or consulting work.
You can bust your butt for a couple years and get your debts paid off and probably have a pretty decent FICO credit score of 720, 740 or even higher – assuming you are also taking care of the other 3 credit score factors.
It won’t be easy. It will take hard work. But once you pay off your debts you will have a nice credit score that you will be proud to show off.
Start with a personal budget, have a good hard look at your expenses and see where you can cut out unnecessary spending. Look for extra part time work and devote all available free cash to your debts to get them paid off.
Normally it takes a month or so for new information to be submitted to the 3 major credit bureaus and your credit report and credit score to be updated. But there is a way you can improve your credit score fast with a rapid rescore service. You can raise your credit scores in as little as 72 hours.
The possibility of increasing your FICO scores by 100-200 points in 3 days is very enticing.
With an improved credit score you can get a better interest rate and a lower monthly payment on your home or auto loan. This can save you hundreds of dollars a month and thousands of dollars over the life of the home mortgage loan or even auto loan. You could also consider using it for a home equity loan or debt consolidation loan.
Millions of consumer credit reports have errors in them that can damage your credit score and possibly deny you for a home loan.
With a rapid rescoring service you can locate these errors, add new positive information such as a paid off credit card balance or the deletion of a collection account.
It does not cost as much as it used to. Your mortgage lender or mortgage broker and help you update all 3 credit bureaus for as little as $100. This is a small price to pay considering you can get a better interest rate and a lower monthly payment.
If you have a legitimate negative item on your credit report and applying for financing or new credit you can consider using a rapid rescoring service to help improve your credit score fast and enjoy more money in your pocket each month with a higher credit score, lower APR and lower monthly payment.
You are busy. Sometimes you forget to make your payments on time and you get hit with a late fee. You may even have to pay a higher interest rate due to your late payment. If you want to boost your credit score an easy way to do so is start paying all your bills on time.
Since over 1/3rd of your credit score comes from your payment history it is critical that you make all your monthly payments on time.
You can setup an automatic bill payment through your bank or with each creditor. This way you can ensure that all your creditors will be paid on time and will report your good payment history to the three major credit bureaus – Experian, Transunion and Equifax.
Late payments ruin your credit score and they can cause your creditors to view you as a higher risk customer and they may increase your credit card APR from a manageable one to a much higher 20% or even 30% APR which you cannot afford to keep up with.
Before you forget and life calls setup an automatic payment or a payment reminder so that you can start paying all your bills on time and start slowing increasing your credit score.
It only takes a few late payments to lower your credit score by 50 to 100 points or more but it takes many months of on time payments to build your FICO score back up.
Start now and you can see positive results in the months to come.
Happy New Year 2012! To start the new year off right, you have to set some resolutions to get out of debt, make more money and lose weight. Doing this will help you get better credit scores. You can be on your way to a perfect FICO credit score by becoming more disciplined with your finances and your weight.
Unless you are working only with cash and a debit card you will need to build and maintain good credit to get favorable financing for a car or home or a good rate credit card.
The higher your credit score the easier it will be to borrow money for the things you want in life such as a car or home or starting a small business.
How To Get Better Credit Scores In 2012
To start with getting better credit scores in 2012 you need to know what is in your credit reports. Head on over to the government’s free credit report site at annualcreditreport.com and get all 3 of your credit reports instantly from Experian, Equifax, and Transunion.
Print them out and start going through them with a fine tooth comb. Go through them and make sure each account, name, address, and social security number listed on there is yours.
Highlight the errors in your credit report and go to the online credit report dispute forms for each credit reporting bureau. All three of the credit reporting agencies have online forms to file a dispute or inaccuracy.
Once you start getting rid of the negative and inaccurate information in your credit file it’s time to start adding positive information. This includes on time payment history, decreasing balances on your outstanding loans, no new credit inquiries, and aged accounts.
There is no magic formula or super secret method for increasing your credit scores overnight. It is just not possible. Building good credit scores takes time and discipline. Just like losing weight. That is why if you can find the time and discipline to lose weight and keep it off you can use those positive habits to pay off your debts, increase your income and build a better credit report which will give you better credit scores.
The FICO credit score factors are
35% payment history
30% debt ratio
15% credit history
10% new credit
10% types of credit
The biggest way to improve your credit score is to pay off all your bills on time. Staying on top of your payments can make the difference between a perfect 850 FICO score and a bad credit score of 650 or below.
The next biggest factor is your debt ratio also known as debt utilization ratio or credit utilization ratio or credit line utilization. This factor is how much of your available credit is being used. Maxing out your credit cards will ensure that you have low credit scores for a very long time.
You can take baby steps and focus on these two factors and you will be on your way to getting higher FICO scores.
Make gradual changes to see long term results. Just like you cannot go do a triathalon without months and years of training, you cannot fast forward your way to a 720, 740 and above credit score. It will take months and years to erase the mistakes and add new positive information to your credit file.
For this month, focus just on paying all your bills on time and not adding on new debts.
Accomplish this and then add the next factor – credit history – next month. This credit score factor deals with the age of your accounts. The older your accounts are open the better. Just like fine wine gets better with age, your credit profile gets better with age. Closing your unused credit card accounts can lower your credit score and that will hurt you instead of helping you.
Next month work on new credit and inquiries. This does not mean apply for new credit. Applying for credit shows a higher risk to potential lenders and it may make them hesitant to approve your loan application or credit line increase.
Keep inquiries to a minimum and you can improve your Transunion, Experian, and Equifax credit scores.
The last thing to focus on for getting better credit scores in 2012 is to have a mix of credit types. This includes car loans, student loans, lines of credit, home loan, credit card accounts, etc. Lenders want to see a mix of secured and unsecured loans on your credit report. This shows you are a good short term and long term risk and can handle your finances.
There are so many similarities losing weight, making more money and getting out of debt have in common. It takes the same habits to eat less fatty foods and exercise more to stop buying stuff you don’t need and missing credit card payments. Eating junk food is the same as buying something on Amazon, eBay or iTunes that you cannot afford and shouldn’t be buying in the first place when you are trying to get out of debt.
This does not mean you cannot have any rewards when you do good. Just like you can reward yourself once a week after you have exercised 5 days this week, you can allow yourself to buy something after you have made all your month’s bill payments on time and not applied for new credit cards or department store credit cards.
This is the take two steps forward one step back process of getting better FICO credit scores in 2012. You cannot go cold turkey and stop eating all junk food so you cannot go cold turkey with frivolous buying. Take the first step and get all three of your free credit reports online from annualcreditreport.com. Then focus on one credit score factor each month and you will be on your way to a perfect 850 credit score. But you don’t need a perfect credit score to get the best deals, a 720, 740 or 760 credit score is almost perfect and will still get you some of the best deals on financing, credit cards, loans and more. And that is something to be proud of. Just like showing off your new body that turns heads.