How To Increase Your FICO Credit Score
Having a good to excellent FICO credit score is more and more important these days. We can help you to learn how to increase your FICO credit score.
Before we start let’s take a look at the FICO credit score and what it is.
How To Increase Your FICO Credit Score
Before we look into how to increse your FICO credit score, let’s take a quick look at what it is.
Credit card companies, banks, and financial institutions use the FICO credit score and your credit report to determine if they can issue you credit. Whether it is credit for a house mortgage, car loan, credit cards, or personal loans, the financial institution will review your credit score and credit report.
The 3 Credit Bureaus
The main 3 credit bureaus that maintain your credit information and credit report are Experian, Equifax, and Transunion. Each one has a credit score system that is a little bit different than the other ones. But they are pretty similar.
Experian
Here are the FICO credit score ranges for Experian.
Equifax
Here are the FICO credit score ranges for Equifax
Transunion
Here are the FICO credit score ranges for Transunion
How To Increase Your FICO Score
How is your FICO credit score calculated ? What factors are used to determine your FICO credit score ?
Understanding this will help you to see how you can increase your FICO score. There are several factors involved, and these are the keys to increasing your score.
Factors That Influence Your FICO Credit Score
Here are the factors that influence your FICO credit score. These are the key areas and factors you need to work on.
- Payment History – 35% of your FICO credit score
- Amounts Owed (Credit Usage) – 30% of your FICO credit score
- Length of Credit History – 15% of your FICO credit score
- Amount of New Credit – 10% of your FICO credit score
- Type of Credit – 10% of your FICO credit score
How To Increase Your FICO Credit Score
Steps to Increase Your FICO Credit Score
1.Check Your Credit Report
Contact Experian, Equifax, and Transunion and get your free credit reports.
Check your credit reports for accuracy and for any errors. Contact the credit bureua(s) about any errors and dispute them.
2.Make Sure to Pay Your Credit Card Bills
Always set up auto pay with your bank checking account for each credit card. This makes up 35% of your score, so it is very important to pay your credit card bills on time.
Every credit card issuer and most other financial institutions have a system to set up auto pay. This will automatically pay your credit bill on time, and you do not have to worry about forgetting to do it.
3.Keep Your Credit Usage Low
Whenever you get a new credit card you are given a credit limit. You need to keep your credit usage as low as possible.
The credit usage percentage is what you owe on your credit card as a percentage of your credit limit.For example, if your credit limit is $10,000 and you ower $1000, your credit usage is 10%.
Worst possible case, you need to keep your credit usage under 30% of your credit limit. But try as much as possible to keep it as low as possible.
This is also very important, as it is 30% of your score
How To Increase Your FICO Credit Score
4. Keep Credit Card Accounts Open As Long As Possible
The age of your credit accounts and credit cards makes up15% of your FICO credit score. You need to try to hold onto credit cards as long as possible. Even if you are not using them.
Try not to get too many high annual fee credit cards, where you need to cancel them because of the high annual fee. And at the same time try to get as many no annual fee cards as possible.
5. Try Not to Get Too Many Credit Cards Too Fast
Since there are so many credit cards out there with many tempting bonuses and perks, it is tempting to get as many as you can. As soon as you can.
Until you increase your FICO credit score into the Good or Excellent range, having too many newer credit cards and credit accounts can hurt your score.
This accounts for 10% of your credit score, so it is something to pay attention to. Especially when you are trying to increase your FICO credit score from the poor ot fair ranges.
6. Get Experian Boost
Experian offers you a free service to help you to increase your FICO credit score. You can sign up for their free Experian Boost service here:
https://www.experian.com/consumer-products/score-boost.html
If you do not have a long or good credit history, Experian Boost is a good idea. By signing up and then regularly paying your utlility bills and cell phone service bills you can increase your FICO credit score.
7. Sign up for UltraFico
What is UltraFico and why can you trust it ?
UltraFico is a joint Financial Inclusion partnership of FICO, fintech pioneer Finicity, and the global leader in consumer credit reporting Experian.
An UltraFICO Score gives lenders a clearer picture of who you are as a borrower. Have you ever felt like your traditional credit score doesn’t tell the full story?
Your UltraFICO Score takes your banking activity into consideration, which provides lenders with a more comprehensive picture of your unique financial situation. Your UltraFICO Score lets you show lenders indicators of sound financial behavior, not visible on a traditional credit report.
These other indicators include:
a) Length your bank accounts have been open
b) Recency and frequency of your bank transactions
c) Evidence of consistent cash on hand
d) History of positive account balances
How to Signup for UltraFico
Soon lenders will be able to provide you with options to participate and opt-in to get your UltraFICO Score. So you can share a more comprehensive overview of your credit readiness.
So you will signup and opt-in through your credit companies.
For more information on UltraFICO go here: https://www.fico.com/ultrafico/
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