Today I’m going to talk to you about how to increase your credit score. I’m going to tell you what a credit score is, how it’s calculated, and then how to increase it. However, before we discuss those issues, we need to ask one question – why are you looking to increase your credit score?
There are three possible reasons and the answers will determine how you approach increasing your score. The first one is the short term reason. For example, you want to buy a car immediately or you want to get into a new apartment. Another is the long term. For example, planning to get a house in three years. The third option is what I call the debt overload. This is where you already have a high debt load and you’re looking to increase your score because you want to borrow money to help pay down this debt.
If your reason is the debt overload situation, then you really should be considering other options as there are better ways to deal with this problem. I am one of a limited number of qualified professionals in Hawaii that can assist you with this. I have helped thousands of people over the last 25 years to get a fresh financial start and I expect I can help you as well.
A credit score is a number between 300 to 850 that is a sort of a snapshot of your credit worthiness. The higher the score, the better you look to potential lenders. Lenders use these scores to determine the probability that you’ll be able to pay them back timely. There are many different credit scoring systems. The score number called the FICO score is the one used by almost all lenders. It gets its name from the name of the company that created it, the Fair Isaac Corporation.
A credit score can play a significant role in your financial life. It’s the primary decision making tool for lenders. If your score is under 640 for example you’re going to be considered a subprime borrower and your interest rates and repayment terms are going to be much more unfavorable. It will also determine if you need a cosigner or even if they’ll lend to you at all.
Your credit score may also determine how much money you have to put down for a deposit to get a phone or your cable or electric bill, or to rent an apartment.
There are three major credit reporting agencies in the United States: Experian, Equifax and TransUnion. They all report on your credit history with your accounts. This information is used in determining your FICO score. What are the factors used when calculating your credit or FICO score?
Please understand that when it comes to increasing your credit score, you can often do as good a job on your own as a credit repair company. The credit repair industry is littered with scams and fraud. And by doing it on your own you can save yourself hundreds and sometimes thousands of dollars.
The first thing you should do is get a copy of all three of your credit reports. An easy way to do this is to go to annualcreditreport.com. Federal law requires the three major credit reporting agencies to provide you one credit report for free every year. However, because of the Covid epidemic they are offering one free report every week.
After you get your credit reports, the most important thing to do is to look at every single negative Item on your credit report to determine if you recognize each item. If you don’t recognize the lender or the amount or think that the aging on your report is wrong, you should fully dispute it. Remember credit history Is the most important factor in your credit score and this is your only real chance of changing your negative credit report history.
You can dispute these items on your credit report several different ways. But since you want to make sure you dispute these negative credit items with all three credit reporting agencies, you can go to their websites and dispute negative credit reporting online.
Because utilization is the ratio of use as compared to the amount available to you, you should not close any accounts even if you’re not using them.
Credit reporting agencies report your balances on the closing date of each month. Make sure your payments are credited to your account with your creditors before the closing date of the month. The credit closing date is not the same as the billing date or the due date. You can find this information on your statement or online.
Your credit utilization score is calculated on a per account basis and then on an overall basis. Spread your credit use over as many accounts as you have in order to lower each per account ratio.
Despite what you have heard, it doesn’t help your credit at all to keep a balance on your credit cards. This will actually hurt your score and will leave you paying interest. If possible, pay your credit cards off in full by the closing date every month.
Put your name as an authorized user on a person’s credit card who has an excellent credit history. While this might have a lower positive impact than having the card in your own name, it is an excellent way to improve your credit since you are not obligated to pay that debt.
If you’re having trouble getting credit at all, there are some ways to get some positive credit history.
A word about Experian boost.
This is a new product created exclusively by Experian. What they are doing is allowing you to use your payment history with items on your bank statements such as utility payments. From what I have seen it will likely increase your credit score a bit but since it is so new I can’t recommend it because I don’t know its long-term consequences.
What kind of credit advice do we offer?
Credit problems are not the same for everyone. You may be seeking guidance for credit card issues. For example, you might be asking, “How do I get more credit?” You may be asking, “How do I get credit?” or “How can I improve my credit score?”
We primarily serve those interested in total debt freedom. Meaning, when you feel overburdened or have run out of ideas. We focus on local Hawaii residents who have exhasuted their credit and are behind on bills. Our clients often have collection agents calling or even harassing for money that our clients just don’t have or will have in the immediate future. In these cases we can help you the most. We use every available method to help you stop collection agent calls, negotiate settlements and when absolutely necessary, we help you file an honorable bankruptcy. Our specialties include Chapter 7 bankruptcy and expert advice to help you avoid prepare for and often avoid bankruptcy. When you need a private attorney to review your ideas, provide feedback and help you understand where you are in the big picture of Covid debt relief, we provide invaluable tools to get the job done. We love Hawaii and want the best for Hawaii residents who have fallen behind and need help to move forward in these difficult times.
I hope you will call me to schedule an appointment. I answer my phone and provide free, no obligation consultations. Help me understand your particular situation by filling out the simple form on the right. I’ll respond to your needs. You’ll get a professional, friendly voice and an honest assessment of your unique situation.
Our website is secure. Your information is private and confidential. I can help with any size client debts and you have my promise to do my best to help you and your family achieve debt freedom. Please call or fill out the form so we can get started.
Thanks and have a great day.