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| Source- http://credit.org/blog/what-is-a-good-credit-score-infographic/ |
Your Credit Score is made up of:
35% Payment History- Late Payments, etc.
30% How Much You Owe- Amount, etc.
15% Length of Credit History- Long, Short, etc.
10% New Credit- New Accounts, etc.
10% Other Factors- Mix of Credit Cards, House Loan, etc.
1. Pay Off Your Credit Card EVERY Month
When you get billed for your credit card, don't make just the minimum payments, this can end up costing you more AND decreasing your credit score. Instead, pay off all the debt/credit you have, in order to increase your score. Making a late payment or defaulting can decrease your score by as much as 100 points! If you do make timely payments though, you can increase you credit score by as much as 80 points! That is a great boost, and can set you up to increase you credit score even more.
2. Keep a Low Balance on Your Credit Cards
Make sure you keep you balance low on all your credit cards and don't hit the credit limit. This shows companies that you are responsible and can handle having large amounts of credit available to you. Also, having higher debt level can dock your score by as much as 80 points. By keeping your debt level low, you can increase your score by, up to, an initial 40 points, but if you make a history of paying on time you can increase your score by an additional 50 points.
3. Open New Credit Accounts/Loans Only When You Need Them
If you open too many credit accounts in a short period of time, companies might get nervous that you will rack up debt because you have too much credit available to you, so your credit score may decrease. To combat this, only open up a new credit account when you need one, plus this, along with paying down your credit further, can help raise your score an additional 50 points! Also, taking out big loans for things like a house or a car, initially, decrease you credit score because they are somewhat risky loans. So, it is a good idea to spread out big purchases by at least 1 year, if not more.
4. Check Your Credit Report Often To Check for Errors
Have you ever suddenly seen your credit score drop? If you have, this may have been an error, which could have been resolved. When you check you credit report, make sure you look for errors, if you see one, contact the creditor and credit reporting agency, to fix it. This can keep your score from decreasing, on average, 20 points, and it shows companies that you are responsible with checking your credit report.
5. If You Miss a Payment, Get Up to Date and Stay There
Once you miss a payment, your score will obviously go down, but that doesn't mean you have to fret too much about it. Evaluate the reason you missed that payment, create a plan, so you don't do it again, and start paying your bills on time and keep it that way. Try setting up automatic payments for things like loans, etc. This shows credit companies that even though you missed a payment, ever since you have been responsible with your credit. Remember the longer you pay your bills on time, the better your score (as much as +40 points).
Not Old Enough to Have a Credit Score? Read this article to learn the #1 Best Way to Make Money as a Kid! (Adults too!)
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