While a credit card has to be the biggest oxymoron in the financial world. You cant credit unless you have credit history. Like what the mess! Plus you get a higher score on the more cards you have and the amount of time you have had them for. High credit card score really means I use more than 2 cards and I have had them for a while and pay my bill on time. Lets break down how scores are determine and what changes you can do to raise your score. Also if you have a low credit score do not be discourage, I have been able to help raise scores over 100 points with just these few tips below.
1.FIND OUT YOUR SCORE
First of all, find out what your score is. If you don’t have a credit card that reports to you your score each cycle then sign up for credit karma. Credit karma is free, however be careful with the advice it gives you. It will try to push credit cards that it believes will help your score, or even push you to file bankrupt depending on your score. Do not sign up for any of the cards it offers you or file for bankruptcy. Filling for bankruptcy without attempting to improve your score would be foolish. Your technically telling yourself, I have no hope in fixing or removing the bad marks on your score.
2.EVALUATE THE MARKS
Sometime people make mistakes, sometime people steal your information. Make sure everything you see on your report was your doing. If you notice you have a card in your name and you never open it, then you need to file a claim. If you notice something went into collection and you paid the bill then call the company and see why. I have notice with many of these it can be a mistake or you just forgot about the utility bill when moving. You can either make a deal with a company and pay a small fraction of the bill to get it removed or you can wait 7 years and it will disappear. (dont wait 7 years unless its been 6.5) If you owe people money pay them. Its simple!
3.PAY YOUR CARD ON TIME
This is rather simple, but can totally jack your score up. One miss payment can be the difference between a 4% loan and a 6% loan. When you miss a payment the credit card company will report the issue and its on your score for a long time. I have a 100% on time payment percentage. This shows lenders I can be trusted and is one of the reason for my high credit score.
4. UTILIZATION OF YOUR CARD
When I first got my card I kept seeing this on my report saying you are over 30% of your card utilization, and I was so confused. It kept rating me at a B, on this category. When I started researching I realized if my credit card limit is 900 I should only charge 30% of that on the card. Even if I pay it all off the next month (Dumb I know). Which meant I could only spend $270 to stay at 30%. The way to fix this is 2 solutions.
(a) Ask for a credit limit, usually the limit goes off of how much you make and how much you can be trusted. If you have a small income and your credit score it low then the credit card company may not raise it.
(b) Get another credit card, this is what I did because I got my first card in college so I didn’t make much money nor did I have much of a credit history. However try to keep your first credit card open for 1 year with paying it on time and using only 30% of the limit. Then apply for another card.
However it calculates 30% across all your cards. So if you have 2 cards or 10 cards it will calculate the total limit and grab your rating by seeing are you using less than 30%. When I got married I put a lot on my card and used more than 30% that month my credit score dropped by 13 points. I promise it makes the difference. However its an easy fix, the next month I was way under 30% and it went right back up.
5.RUNNING YOUR CREDIT
I hate when utility companies, or cell phone companies have to run my credit. This will initially lower your score. When you go buy a car they constantly run your score with different lenders to see how much they will charge you in interest. While these marks on your score don’t last long, you will want to make sure your not having your credit ran all the time. So remember that, when you are opening new credit cards, and changing cell phone companies. However checking your score will not lower.
6.CREDIT HISTORY MATTERS
I honestly hate this. It drives me insane. I got a credit card when I was 21 years old, and still my credit history seems too short. I have a C+ rating in this area, and its just one of those things that will get better in time.
While I hate credit scores, I realize you cant live in this world without it. So you might as well have a good score. Know and learn the simple things that help your score and continue to work on it. It can save you tons of money throughout life, whether it be when your buying a home, buying a car or even getting a cell phone. Your credit score is nothing to be scared off it changes month to month and if you have a low score all you need is time and it will improve.