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These 3 Numbers can Change Your Life

Updated: Aug 4

Helpful Hints to Raise Your Credit Score





3 is a Magic Number. *Queue Schoolhouse Rock* In the grownup world, too, 3 numbers can dictate significant factors of your life. Your credit score is paramount in buying a house, a car, financing other large purchases, and more! Today we talk about how to raise your credit score. If you’ve had a little trouble, these tips can help you raise your score! If you’ve been pretty good already, these tips can provide a few ways to raise your score or keep it high!


Terms to Know:


Credit Score: A 3-digit number that dictates if you are worthy of credit. A credit score ranges from 300 to 850, and the higher the credit score, the better.


FICO Score: A credit score model used by financial institutions.


Credit Utilization Rate: This rate helps you understand how much debt you have in comparison to how much credit you have available.


Get Your Score


The first step in fixing your credit score is discovering your score! Here are a few places you get a free credit score:


  1. Mint

  2. Experian

  3. Free Credit Report

  4. Equifax

  5. TransUnion


Exploring Your Score


Where do you range on the scale?


According to Investopedia, a FICO score range may look like this:

  • Excellent: 800 to 850

  • Very Good: 740 to 799

  • Good: 670 to 739

  • Fair: 580 to 669

  • Poor: 300 to 579

Typically, once you hit 700, a lot of doors open up for your creditworthiness. Keep in mind that every creditor has their own range, but above is FICO’s standard interpretation.


Typically, once you hit 700, a lot of doors open up for your creditworthiness.

About Your Score


Now that you have your score, you can begin to explore your current standing. One way to measure your credibility is to calculate your credit utilization score. Use this equation:


Credit Utilization Score = Total Debt / Total Available Credit


Ideally, your score should stay under 30% of debt to available credit.

Ideally, your score should stay under 30% of debt to available credit. If you’d like more information, Experian has a great article about calculating more complicated credit situations.


Improving Your Credit


Credit Cards


Pay them Off Regularly


By paying off your credit card every payday, you’ll be able to keep a closer eye on how you’re spending and give an opportunity to create a more manageable budget.

You’ve likely heard this one a ton, but it really can help your score! Even better than paying monthly, pay every payday. By paying off your credit card every payday, you’ll be able to keep a closer eye on how you’re spending and give an opportunity to create a more manageable budget. While paying off your credit card obviously helps you lessen your debt, you’re also not wasting money paying interest rates!


Interest Rates

Speaking of interest rates, take the time to shop around for the best interest rates for your needs. Take a look at how they measure up to the rewards and consider how you plan to use the card. If you have multiple credit cards, create a plan to pay off high-interest cards first.


Raising > New Card


Every time you apply for a new credit card, a hard inquiry is required.

Every time you apply for a new credit card, a hard inquiry is required. These stay on your credit report history for 2 years! Instead, initially consider asking for a raise on your credit limit! Ask your financial institution if they can complete an increase without a hard inquiry!


Bills, Bills, Bills


Your bills can also be a source of concern for improving your credit score. Consider automatic payments for recurring fees, so you never have to worry about missing a deadline. If that doesn’t sit right with you, set a regular reminder on your phone or calendar to pay your bills on time.


If a bill goes to collection, it will stay on your credit report for 7 years. 7 years! That’s enough time for every cell in your body to be replaced! So, if you see an error, dispute it! The extra effort is certainly worth it, especially if you’re on the line between a good and a great credit score!


Conclusion


The three magic numbers of your credit score are powerful! By organizing your personal finances, you can continue to raise your score! Questions, comments, or extra tips? Contact us today!


Resources

How to Improve Your FICO Score | myFICO

What is a Credit Utilization Rate?

How to Improve Your Credit Score Fast

Credit Score: Definition, Factors and How to Improve It

7 Ways to Build Credit Fast

5 Sneaky Ways to Improve Your Credit Score










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