6 Top Tips to Improve Your Credit Score

When it comes to credit scores, there’s almost always room for improvement. If you’ve pulled your score and you’re not satisfied with the number you received, there are several strategies to boost it. We have 6 top tips to help improve your credit score. But first, let’s get a little insight into how that score is calculated.

How is My Score Generated?

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VantageScore, the company that generates the credit score you see here, uses five major categories of information, all of which were reported to the credit bureaus by your lenders to generate scores that range from 350 to 850 (higher is better, of course).

Each category is weighed differently. Here’s how the VantageScore* breaks down:

40% Payment History. Lenders want to see a history of consistent, on-time payments.

23% Credit Usage. Also known as credit utilization, is the ratio between the total balance you owe and your total credit limit on your accounts.

  • Tip:  Try to keep your credit utilization at 30 percent or below. The reason is that if you are consistently maxing out your credit cards, it may look like a sign of desperation in the eyes of a lender.

21% Credit Age. This is the age and type of credit you have. This percentage factors into how long you’ve had different kinds of credit accounts open. The older your credit history, the better.

11% Account Mix. Your credit account mix considers the number and type of accounts you have. Your score may be higher if you have a mix of both installment credit, like mortgages or car loans, and revolving credit, like credit cards.

5% Inquiries. This is based on recent credit applications. Opening multiple credit accounts in a short period could represent a greater risk for lenders — multiple recent inquiries may worry lenders that you are applying to so many places because you are unable to qualify for credit — or because you need money in a pinch — so avoid opening too many accounts too quickly.

  • Tip: You don’t have to worry about this if you’re shopping for a mortgage or car loan. All inquiries within 14 days count as a single inquiry.


 Improve Your Credit Score by Doing the Following:

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  • Pull your credit reports.  As a member of Blue Chip FCU, you can access your credit reports for FREE through our Credit Sense Program! Just log into your mobile or online banking to use this FREE service and enroll.
  • Pay your bills on time. One day late is still considered late, and just one late payment can lower your score.
  • Pay down credit card debt. You don’t want to be using more than 30% of the total credit available to you. Keeping your utilization well below that (closer to 10%) can give your score a boost.
  • Hang onto old cards. Your credit score benefits from long relationships with lenders, so cut them up, but don’t cancel them if you can help it.
  • Be thoughtful about shopping for new credit. Every time you apply for a new card or loan, the lender takes a peek at your credit history, which may ding your score.
  • Spread your debts around. The mix of credit you have in your file—mortgages, student loans, auto loans, credit cards—shows that you can manage debt from multiple sources.

Remember that time – and patience – are key. You shouldn’t expect to improve your credit score overnight, but you will see improvement over the course of 12 to 18 months – shorter, if your score is already fairly high and you’re just looking for a bit of a jump.

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As a member of Blue Chip FCU, you have FREE access to our new credit monitoring program, Credit Sense! Credit Sense allows you to access your credit score, full credit report, credit monitoring, financial tips and education. You can do this anytime and anywhere from your smart phone or computer. The best part… it is super easy to get started! Just log into mobile or online banking to use this FREE service and enroll today! If you have any questions, don’t hesitate to contact our expert staff at 1-800-782-2328 or email us at staff@bluechipfcu.org.

*based on VantageScore 3.0

Source – Savvy Money – Author, Jean Chatzky