5 Things You Can Start Doing Now To Increase Your FICO Score

Almost 40% of Americans have no idea about their FICO score.

That’s not a surprising number, given the fact that most schools don’t even teach about credit.  

This three-digit score ranging between 300-850 carries a lot of weight in your financial world. Think of it as a reflection of your financial discipline when it comes to paying back borrowed money. It determines your eligibility for a loan or a credit card, and the interest rates you will be charged.

Remember that your score keeps changing as you make credit payments and take on new debt. Hence, it is important to practice good behavior. Below are a few things you should start doing now to make sure your FICO score is headed north!

Prioritize on-time payments

This is a no-brainer. Late payment on things like loans, mortgages, and credit cards can hurt your FICO score. Furthermore, it stays on your report for up to 7 years. The best way to avoid this is to set up automatic payments within each credit account. Even if you can’t pay off in full, make sure to clear the minimum payment regularly to keep your account in good shape.  

Keep your credit utilization rate below 30%

You can’t expect the lenders to be your ally when your credit limit is $1000, and your card balance is $500. Your credit utilization makes up 30% of your FICO score, and you should always try to keep your due amount below 30% of the credit limit. The lower it goes, the better the chances of boosting your creditworthiness. Another way to do it is by requesting an increase in credit limit.

Avoid taking too many loans or credit cards

Opening a new line of credit can boost your FICO score if you manage your debt responsibly. However, it can sometimes backfire when you overdo it. Every time you apply for a loan or a credit card, the creditor will conduct a hard inquiry, which will be highlighted on your report. This has an impact on your credit score. It’s better to focus on your existing accounts and build your credit mix over time, rather than piling it up.

Review your credit report

Trying to improve your FICO score without reviewing the credit report is like going into uncharted territory. Credit bureaus can sometimes make mistakes in updating your records. You should take advantage of the free reports that you receive, and spot any errors that may be affecting your score. In case you find one, raise a dispute and get it resolved.

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