Increasing Credit Score Tips

Increasing credit score is much like hiking, you do it over a long distance at a moderate pace. Overall, it is a slow process, but increasing credit score to a reasonable degree can be achieved in a hurry. 

About 30 million people in the United States have such poor credit score that make obtaining credit cards or loans with sensible terms difficult.

If you have bad credit score, increasing credit score is vital because you'll pay more for car loans, credit cards and mortgages. Even if your credit is OK, you should still consider improving your credit score. After all, better interest rates will bear many financial benefits over time.

You may think you are in a hopeless situation, but poor credit will not last forever. There are things you can do right now that will make increasing credit score possible.

Credit score is usually based on these factors:

Pay your bills on time - Late payments, collection agency account, and history of bankruptcy will show up in your credit report. Even if you make full payment for a collection agency account, it will stay on your report for seven years and it can make the task of increasing credit score difficult.

The length of your credit history - A short credit history usually has negative effect on your credit score, the best thing to do is to make timely payments and keep low balances to continue increasing credit score.
   
Outstanding debt - This is the amount of debt you have against your credit limits. If you have used up your credit close to the limit, this could have negative effect on your credit score.
    
The types and number of credit accounts you have - A mix of installment loans and credit cards may result in increasing credit score. On the other hand, having too many accounts will offset the benefits of well mixed credit types.
   
Recent credit applications - Applying for too many credit cards in a short span for example, affects your credit negatively. Note that requesting a copy of your own credit report is considered a soft inquiry and so are creditors monitoring your account and looking at credit reports to make pre-screened credit offers. Only hard inquiries can affect your credit score and when you apply for credit, the creditors will make hard inquires. To keep increasing your credit score, you must keep the hard inquiry count low.  

Understanding these factors will help your improve your credit score and small improvements month to month will add up to be quite significant over time.
    

Reduce credit card balances - Reducing or paying off credit card balances (revolving account) is much more effective way of increasing credit score than paying off auto loan, mortgage, student loan, and etc. If you can get every card's balance below 30% of the limit, you can expect to improve your credit score rather quickly.

Credit limit discrepancy - Your lender sometimes does not update your information promptly and your credit report might show lower limit than your actual limit. Request the credit card issuer to update this information.

Remove old negative items - For the exception of bankruptcy which stay in your report for 10 years, negative items older than 7 years should have been automatically removed from your report. Increasing credit score doesn't get any simpler than this.

Ask your creditor for help - No, that was not a typo. If you have been a responsible customer in the past, write them a letter and ask to have that one late payment removed. It doesn't hurt to ask and it works more often than you'd imagine. If one letter could result in increasing your credit score, you must give it a try.

Start using old cards - The older your credit, the better. It's time to start using that old credit card that's been collecting dust. If the issuer of the older card stops updating your credit to the credit bureaus due to inactivity, your older credit will not have much impact on increasing your credit score.  

Temporary Hardship programs – Take advantage of these programs offered by many creditors, you can have your monthly payments reduced for an extended period of time. This can help you pay off other debts and right now you may be a phone call away from improving your credit score.  

Get your credit report - Under federal law, you are entitled to receive a free credit report from all three national reporting companies every 12 months. You need to know the problems before you can begin repairing your credit. Correcting mistakes can result in increasing credit score.

Clean up your credit report - Inaccurate information can be disputed and every credit report includes directions to dispute information believed to be incorrect. A single negative item on your credit report can put a huge dent on your credit score.

It is important to note that once your credit score reaches 700 and above, any efforts to improve your credit score will have less impact than if your credit score were poor or mediocre. But for those with poor or mediocre credit scores, you may apply the above techniques to continue increasing your credit score.