Improving your FICO credit score may feel like an impossible task, but it doesn’t have to be. Of course, paying your bills on time and keeping your debt low are well-known (and a must). But some strategies can help boost them. We’ve compiled the 9 effective tips to help you master your credit score.
9. Pay Your Credit Card Bill Twice a Month
Instead of paying your credit card bill once a month, make two payments if you can. Many people don’t realize that card issuers report your balance to credit bureaus on your statement closing date, which is often weeks before your actual due date. Even if you pay your bill in full every month, a high balance on that specific date can still result in a high credit utilization ratio that lowers your score. Once you try out this trick, this ensures that your reported balance is low, which can lead to a fast score increase.
8. Use the “Rate Shopping Window” to Your Advantage
Many people avoid shopping for the best loan rates. Well, they fear multiple hard inquiries that will damage their credit score. But here’s the truth: a hard inquiry can cause a temporary dip; FICO’s scoring models are built in a rate shopping window. Certain types of loans, like mortgages, auto loans, and student loans, are made within a specific period and are treated as a single event. Depending on the FICO model, the window can be anywhere from 14 to 45 days to allow you to compare from multiple lenders without your score taking a hit.
7. Become an Authorized User (But Do Your Homework First)
An authorized user on someone else’s credit card can be a powerful way to build credit. But a LendingTree study revealed that if you’re added to an account that has a high credit utilization ratio, it can cause your score to plummet. Some users added to cards with utilization over 52% saw their scores drop by 34 points. The only key is to be added to an account with a good history of on-time payments and a credit utilization ratio below 30%.
6. Dispute Every Error on Your Credit Report
Many cardholders don’t realize how a small mistake can be impactful. We’re talking about mistakes like a single incorrect late payment, a misspelled name, or an account that doesn’t belong to you can drag your score down. With this, use a free credit report from each of the three major bureaus (Equifax, Experian, and TransUnion) every week at AnnualCreditReport.com. Go through each of your reports and dispute every single error to see, no matter how minor they are. Credit bureaus are legally required to investigate the disputes reported within 30 days.
5. Add Your Own Positive Payment Data with Experian Boost
For long, on-time payments like rent, utility bills, and streaming services didn’t count towards your credit standing. But it’s different with services like Experian Boost, which allows you to add these positive payments to your Experian credit file for no charge at all. Just connect your bank account and choose to have the on-time payments reported to provide a boost to your FICO Score.
4. Don’t Close Your Oldest Credit Cards
Closing old credit card accounts you don’t use anymore can hurt your credit score. First, you reduce your total available credit, which increases your credit utilization score. Second, it shortens the average age of your credit history, which is 15% of your FICO score. Remember, a long credit history shows more data that you can manage credit responsibly.
3. Understand the Nuances of Credit Mix
Your credit mix refers to the different types of credit you have, which makes up 10% of your FICO score. Have at least one revolving account (credit card) and one installment account (loan) on your report, even the old ones. A good mix develops over time as you use your credit for different life events.
2. Aim for Single-Digit Credit Utilization
While the 30% credit utilization rule is a well-known guideline for cardholders, many people with the highest credit scores feature a utilization in single digits. Staying under 30% is good, but reducing your utilization as low as possible can have a significantly greater impact. To keep them low, pay down your balances, ask for a higher credit limit (and not use it), or combine these strategies.
1. Ask for a “Goodwill Deletion” for a One-Time Late Payment
If you have a single late payment on your credit history but a good history of most on-time payments, you can have it removed. Just write a letter to your creditor by politely explaining whatever situation led to that late payment, and ask them to delete it from your credit report as a gesture of goodwill.