Many consumers are starting to learn how to use their credit score to their advantage and improve their credit score over time.We are seeing credit scores increase over time from a large number of consumers, mostly because people are learning to use their credit better.FICO (which is used to calculate most credit scores) released a report recently that demonstrated that the national average credit score is higher now than it has been all decade.
That’s a trend we can take some hope from, as a credit score is pivotal in determining how much risk a potential borrower represents for lenders. Many lenders use that score to decide how high the rates should be on credit cards, loans, mortgages and home insurance.
As our credit score improves, the rates made available will improve.The FICO score you have can be anywhere from 300 to 850. The average FICO score in April 2015 was 695
, which was up 7 points from October ten years ago.A good credit score is considered any that is over 680, however, scores that are at least 740 are considered excellent.
If you want to be approved for the best available rates, that’s the kind of score you need to have.A lot of different pieces of data are used to determine your credit score. The score is based off of five categories- the type of credit you use, the age of your accounts and length of credit history, the new credit inquires that have been made, your payment history and how much you owe.Here are some more ways to improve your score.
Get a Free Credit Report
If you want to fix your credit, then the first step is to check it by getting your credit report.
According to the Urban Institute, about 35% of all Americans are experiencing debts that have been taken into collections. About 1 in 20 Americans have debt that is 30 days or more past due.Not everyone knows about the unpaid debts and the late payments they have
, and they should check their credit report to see them.You can get a free copy of your credit report on AnnualCreditReport.com, and you are entitled to an annual report from each of the three credit bureaus. The report doesn’t have your credit score on it, but it does show you the information that’s used to determine your score. Look for errors when you get this report.If you want your credit score, the agencies Equifax, Experian and TransUnion will give it to you for a fee, but you can get a free credit score in other ways.
Obtain Your Free Score Credit.com, CreditKarma.com and Quizzle.com all offer free credit scores.
They use information from one or more credit bureaus to determine your score.Many different credit card companies offer free FICO credit scores as well. These include Barclaycard US, American Express, Bank of America, Chase, Citi, First National and Discover.
Pay Debts on Time Your payment history is the most pertinent factor used to determine your credit score.
When you miss payments, then you need to correct that behavior by paying on time and paying regularly. You can have your bank tied to your credit card accounts and other bills to automatically pay each bill as it is due.
You may not be able to fix missed or late payments, but the longer you pay regularly and on time the better your score will be over time.You should always pay your bills on time and work on the higher interest balances as you can.
These not only cost you more in interest, but they also affect your credit score more.
Find Help from Professionals You can get some help from counseling agencies
that are not for profit as well as various financial professionals who can help you lower your total debt or just manage your money better. All this can improve your credit score.You can get a consultation from SharpenToday.org, which is a financial counseling program from the NFCC.Ohio State University conducted research that showed that almost 75% of everyone who went through this counseling program were able to pay on time more often and most clients improved their credit score by 20 points or more in under two years.
Want professional help? Our credit strategists offer free consultations.