Having excellent credit comes down to following 3 simple rules: Use your line of credit regularly, make at least the minimum payments, and make your payments on time. Borrowing money and paying it back on time increases your “good” credit points and raises your FICO score. Late payments, collection accounts, liens and judgments increase your “bad” credit points and lowers your FICO score.
Here are The top 5 Ways to Raise Your FICO Score:
1. Keep your Credit Card Balance Below 30% of the Credit Limit
Make sure that each of your credit cards carries a balance of no more than 30% of the total limit. If you feel the need to borrow more money than that, try to use another credit card. It is better to spread out credit card debt over multiple cards than to have a large balance on one card
2. Remove “Late Payments” Reported on your Credit Report.
Many creditors (though not all) will remove one 30-day late payment record upon request. Call the customer service phone number on your monthly statement and ask to speak to the department in charge of adding and removing late payments. Tell them the late pay was an honest mistake, and ask if they would remove one 30-day late payment record as a courtesy to you. If they say no initially, don’t be too proud to beg a little.
3. If You Have to Make a Late Payment, Make Sure It’s Less Than 30 Days Late.
Pay the minimum payment no more than 29 days after the payment due date. You will not be reported 30-days late if you do so, and your FICO score will not be negatively affected.
4. The 3-Credit-Card Rule: Use 3 credit cards on a monthly basis.
The more you borrow money and pay it back on time, the more your FICO score will increase. You do not need to carry a balance, and you do not need to buy large ticket items.
5. Pay Off or Settle “Derogatory” Accounts.
Derogatory accounts are unpaid collection accounts, tax liens, and judgments. Unless you pay off or settle these accounts, your score will never improve.
If even if you have a low FICO score, the good news is that the past need not equal the future. Starting today, make every payment on time, and watch your credit score start to skyrocket!