Waya's Web Developer
Your FICO score is an evolving number. This month it might be 650, and next month it could jump to 670. You never know when it might change or how. But there are ways you can control it, ensuring you have a good FICO score.
You might wonder, what is a good FICO score, and what should I strive for? A good FICO score is subjective, based on what you want to achieve, but in general, aim for at least a 670 to have ‘good credit.’
If a good FICO score is 670, what is a bad one? Again, this is all relative, but generally, any credit score below 579 is considered ‘bad’ or ‘poor.’ This often means lenders won’t approve your loan application; if they do, it will be for higher interest rates.
Fortunately, there are some simple ways to increase your FICO score. Here’s how.
The first step to increase your FICO score is to bring your payments current. If you’ve missed payments, pay them now, and keep making them on time. Your payment history makes up 35% of your credit score.
Consider paying debt down if you have a lot of outstanding consumer debt. The ideal credit utilization rate, which compares your outstanding credit to your total credit line, should be less than 30%. If you have high credit limits, work out a debt payoff plan to pay the balances down quickly.
Everyone gets free access to their credit reports here. Check yours often, and if you notice incorrect information, have it changed. You can file a dispute with the credit bureaus online. Taking care of errors immediately is important because they can drastically affect your credit score.
If you have accounts you no longer use, consider keeping them open. Your credit length plays a role in your credit score. The older your credit is, the better it is for your credit score. For example, if you have an old credit card you don’t use anymore, consider keeping it open. This increases your credit length and lowers your credit utilization because you have a credit line with no outstanding credit.
If you’re shopping for a loan and looking for the best rate, consider shopping within two weeks. This shows the credit bureaus that you’re shopping for the best rate, and they’ll only hit your credit score with one inquiry, not multiple.
Lenders look at your credit history to see if you’re financially responsible. You can prove you can handle multiple debts if you have a mix of installment and revolving debt loans. A good credit mix also helps increase your credit score.
Landlords don’t normally report rent to the credit bureaus, but they can if you ask. An on-time housing history can greatly help your credit score. Consider asking your landlord to report your rent or sign up for services like Experian Boost to have rent and utilities reported.
If your credit utilization is high and you can’t pay it down, consider asking creditors for a credit line increase. If you have on-time payments and show responsible use of your credit, you may qualify for a credit line increase, which automatically reduces your credit utilization and increases your credit score.
Increasing your credit score is possible! If you think you don’t have a good enough credit score after finding out the answer to ‘what is a good credit score,’ consider implementing these tips. It can take a while to see improvement, but you can increase your score with consistent effort.