- Know What’s in Your Credit Report
- Payment History
- Credit Utilization
- Length of Credit History
- Types of Credit
Credit scores are one of the most important factors in your financial life. A good credit score can help you qualify for loans and get better interest rates, while a bad credit score can make it harder to get approved for financing.
If you’re looking to improve your credit score, there are a few things you can do. In this blog post, we’ll share some tips on how to get an 800 credit score.
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Know What’s in Your Credit Report
Get a free copy of your credit report
You are entitled to a free credit report from each of the three credit reporting bureaus every 12 months. To get your free annual report, visit AnnualCreditReport.com or call 1-877-322-8228.
When you request your free credit report, you’ll need to provide your name, address, Social Security number and date of birth. If you’ve been denied credit, employment or insurance in the past 60 days, you may also be required to provide a copy of that denial letter with your report.
You can get your report from each of the three credit bureaus at the same time or stagger your requests throughout the year to keep an eye on your credit more frequently.
Review your credit report for accuracy
Your credit reports are compiled by the three national credit reporting agencies — Equifax, Experian and TransUnion. Each time you apply for credit, the lender will likely check your report with one or more of these agencies. Inaccurate or outdated information could lead to declined credit applications or less favorable loan terms.
You can get a free copy of your credit report from each agency every 12 months at AnnualCreditReport.com. Be sure to review all three reports — mistakes are more common than you may think. If you find errors on your report, you can dispute them with the credit bureau and the lender or creditor.
The most important factor in your credit score is your payment history. This is the record you have of making on-time payments to your creditors. If you have a history of making late payments, your credit score will suffer. Conversely, if you have a history of making on-time payments, your credit score will benefit.
Make all your payments on time
One of the most important things you can do to improve your credit score is to make all your payments on time. Payment history is the largest factor influencing your credit score, accounting for 35% of your FICO® Score.
Missing a payment can have a big impact on your credit scores—especially if you have a history of late or missed payments. If you have missed a payment, get current and stay current. Once you are back on track, try to make at least your minimum payments before the due date each month.
If you have had difficulty making payments in the past, consider enrolling in autopay or setting up reminders so you don’t miss another payment. You may also want to consider consolidating debt onto one card with a lower interest rate so you can pay off the balance faster.
Set up payment reminders
One way to make sure you always pay your bills on time is to set up automatic payments or payment reminders through your bank or credit card issuer. This way, you won’t have to worry about forgetting to make a payment or paying a late fee.
Another option is to sign up for a free service like Mint, which can track all of your bills and alert you when one is due. All you need to do is enter your login information for each account and Mint will do the rest.
One of the most important things you can do to improve your credit score is to keep your credit utilization low. Credit utilization is the percentage of your credit limit that you’re using at any given time. For example, if you have a credit limit of $1,000 and a balance of $500, your credit utilization would be 50%.
Keep your credit utilization low
Credit utilization is one of the key factors involved in your credit score—it accounts for 30% of your FICO® Score 8 calculation—so it’s important to keep it in mind as you manage your credit accounts.
Credit utilization is the amount of debt you have relative to your credit limit. Put another way, it’s how much of your available credit you’re using at any given time. For example, if you have a $1,000 balance on a credit card with a $5,000 credit limit, your credit utilization would be 20%.
Ideally, you should keep your credit utilization below 30% on all of your accounts—the lower, the better. If you can get it below 10%, that’s even better. Why? Because lenders see consumers with low credit utilization as less risky borrowers, which could lead to more favorable terms on new loans and lines of credit, including lower interest rates and fees.
If you have a high credit utilization, there are a few things you can do to bring it down and improve your credit scores:
Pay off your balances in full each month
Credit utilization is one of the most important factors in your credit score—accounting for almost 30% of your FICO® Score 8 calculation—and it is nothing more than the amount of debt you owe divided by the amount of credit available to you. So, if you have a $1,000 balance on a credit card with a $5,000 limit, your credit utilization ratio would be 20%.
There are a number of things you can do to improve your credit utilization ratio, but the most effective way is to simply pay off your balances in full each month. This will not only reduce your credit utilization ratio but will also help improve your payment history—another important factor in your credit score. If you are unable to pay off your balances in full each month, try to keep your credit utilization ratio below 30% for optimal results.
Length of Credit History
One factor that affects your credit score is the length of your credit history, which is the total time you’ve had all your accounts open. The longer your history, the better – but don’t close old accounts! Doing so could hurt your score by shortening your credit history.
Don’t close old accounts
The length of your credit history accounts for 15% of your FICO score—the credit score that most lenders use when they’re evaluating you for a loan. So, it stands to reason that closing an old account could shorten your credit history and end up hurting your score in the long run.
Keep your oldest account open and active
One of the biggest factors in your credit score is your credit history — more specifically, how long you’ve been using credit. That’s why it’s important to keep your oldest account open and active, even if you don’t use it much anymore.
If you close an old account, you lose the benefit of having a long credit history, which can hurt your score. And if you have a good payment history with that account, you also lose the positive impact of those on-time payments. So even if you have other accounts that you use more frequently, it’s important to keep your oldest account open and active.
Types of Credit
There are two types of credit–secured and unsecured. A secured credit card is collateralized by a deposit you make with the issuer, typically equal to your credit limit. This deposit reduces the risk to the issuer, so these cards often have lower APRs and may help you rebuild your credit. An unsecured credit card doesn’t require a deposit, but may have a higher APR.
Use a mix of different types of credit
One way to help improve your credit score is to use a mix of different types of credit. This could include a mixture of both installment loans (such as auto loans or mortgages) and revolving credit (such as credit cards).
Using a mix of different types of credit can help show lenders that you are a responsible borrower and can help you get better loan terms and interest rates. It’s important to remember, however, that you should only apply for credit when you need it and that you should always make your payments on time.
Apply for new credit only when necessary
Opening new lines of credit can drop your score by a few points because it increases your overall credit utilization. Plus, every time you apply for new credit, the lender will do a hard pull on your credit report, which can temporarily lower your score. So, only apply for new credit when necessary – and when you know you’ll be approved.