Managing your money is an important part of your long-term success. However, your credit score can get in the way of your financial independence if you don’t know how to improve it. Use these tips to improve your credit score, build a stronger credit profile and experience a taste of financial freedom.
What Factors Into Your Credit Score?
Your credit score is a complete profile of your spending history, including everything that has been reported to one of the three major credit bureaus over the last seven years.
Your credit score consists of:
- Payment history
- Credit use
- Duration of open credit lines
- Credit mix
- New credit inquiries
Improving these factors is the best way to increase your credit score. Remember, however, that it can take time to increase your credit score because these reports cannot — and do not — change overnight.
Also, negative items fall off your credit report automatically after 7 years.
Why Is Each Credit Bureau Reporting a Different Score?
The three credit bureaus are:
- TransUnion (NYSE: TRU)
- Equifax Inc. (NYSE: EFX)
- Experian (OTCMKTS: EXPGY)
These bureaus are owned by separate entities, and they receive reports from different companies at different rates. For example, that credit card you accidentally defaulted on when you were a poor college student might not have reported to Experian for one reason or another.
Plus, your credit scores will shift in different ways — and at different times — because they receive reports, process those reports and post your scores in their own time. Yes, your scores might look wildly different today, but they could align with one another tomorrow.
Tips To Raise Your Credit Score 200 Points
As you look into what can be done to raise your credit score 200 points — or even more — use these tips to change your financial habits, adjust your lifestyle and make wise choices.
Pay off Debt
In an effort to improve your credit score, paying off debt makes the greatest impact. While it can be difficult, you might consider using the snowball method: paying off the smallest debt first, applying that money to the next-largest debt to pay it off faster and continuing until you’re debt-free.
Reach out to Creditors
Reach out to creditors when you believe they have reported to the bureaus improperly. At times, they can make corrections. If not, reach out to the credit bureaus to dispute incorrect items on your report. This is especially helpful if items haven’t fallen off your credit report at the appropriate time.
Schedule Your Payments
Use digital platforms to schedule your payments, ensuring that they will arrive on time. If you must, reach out to creditors to change your payment date so you can make those payments faithfully.
Try Credit-Building Loans
Credit-building loans can advance you a small amount of cash, allowing you to report to the credit bureaus even more.
Obtain Diverse Forms of Credit
Obtain diverse forms of credit that range from credit cards to loans. Personal loans, student loans, mortgages, lines of credit and credit cards make your report more diverse.
Use as Little Credit as Possible
Use as little credit as possible. It can be difficult to do when you experience emergencies, but otherwise, you should try to pay cash for as many items as possible.
Use Additional Services To Report Bills to Credit Bureaus
There are additional services like LevelCredit that allow you to report bills you pay regularly that are generally not covered by the three major credit bureaus.
Remain patient when you want to increase your credit score. It takes time to get the best results, but your patience will be rewarded.
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Improve Your Credit Today
You can improve your credit rating today using the tips above, but you must give yourself time to get the results you want. You can increase your credit score 200 points, but you will need to be realistic about how long this process might take.
Frequently Asked Questions
What raises your credit score the fastest?
There is no fast way to raise your credit score. Your credit profile moves slowly, and your score increases in tiny increments as you make good choices. You can dramatically improve your score, but it will not jump overnight.
How many points will a credit card raise your credit score?
A credit card does not raise your score a specific amount, but it can help increase your credit score, provided you keep your use low and make your payments on time.