Credit experts share their top tips for taking control of your FICO score and boosting your credit fast
Sometimes it feels like you have no control over your financial life, like you can’t seem to get on top no matter what you do.
It can be extremely frustrating and this feeling of helplessness is one of the biggest reasons people fail at budgeting and reaching their financial goals.
At the heart of all this is one number, three digits that determine whether you get the money you need or are locked out of the financial system.
It’s your credit score and it could be the single biggest factor in your finances.
Your credit score determines the interest rates you get on loans, contributes to how much you pay for insurance and can even keep you from getting a job!
That’s why I reached out to five credit experts to get their best tips on taking control of your credit score and how to boost your FICO.
Understand FICO Score Factors
First, you have to understand what goes into your FICO score and contributes to your bad credit. Once you know the five credit score factors, taking control of your FICO is just a matter of time.
Five FICO Score Factors in Your Credit
SB of One Cent at a Time shares a list of great ideas, some quick ways to boost your FICO and few rules.
- The biggest contributor to a decent credit score is a record of on-time payments. Set up auto pay on your credit cards and loans to make it easy.
- Increase your credit score further by diversifying types of credit. Add other loans like auto and mortgage to the mix of revolving credit, aka credit cards.
You can increase your score further by continuously applying for higher credit limit and paying off credit card purchases before the due date. This keeps your debt-to-credit ratio to the lowest level at the time of your statement. Lastly, you need to monitor your score at least every quarter to check for any error from creditors, govt. agencies or healthcare providers.
Using Credit Cards to Increase Your Credit Score
Credit cards get a bad name, especially among bloggers, but they do provide a very valuable service. Without cards, you’d have to constantly carry around a wad of cash.
Credit cards can also help take control of your FICO score if you use them right.
Sherry of Save Spend Splurge has some great advice in treating your credit card like a debit account.
- Get a credit card with as high of a balance as possible and spend on it, while paying the balance off every time you do.
- Treat it like a debit card and pay the balance immediately, or at least before it’s due each month.
- Paying the minimum each month helps to show you can meet your debt obligations. Just paying this amount will mean losing money to interest but it will still help increase your credit score.
Don’t avoid credit cards but keep in mind they can be a heavy hammer on your financial life. Just like any hammer, use it right and you can build something amazing. Use it the wrong way and you’ll smash things up fast!
Play by the Credit Score Rules
Sometimes it feels like the financial system is a game. Some people have been taught how to play at an early age and are practically professionals in getting cheap money. Others never had the benefit of a good coach and never learned the rules.
Simon at Cafe Credit recommends three FICO-boosting tips.
No matter where you are in your credit journey there are two simple ways to improve your credit score. Pay all of your current credit accounts on time, and pay down your credit card debt.
If you're looking for hacks to grow your FICO score faster, you can try some of these options:
- Pay your credit card multiple times a month. This lowers your utilization ratio.
- Ask for an increase in your credit limit on an existing credit card.
- Let time pass. A longer credit history will improve your credit score.
Riley at CreditFaire hits again on the importance of your credit utilization ratio.
Avoid sending minimum payments to several different lenders. It’s harder to manage and you could miss a payment, destroying your FICO in the process. Start by consolidating your debts as much as possible to simplify your monthly payment. Plan out how much additional income or increase in payment it would take to pay it off in one year and stick to it.
Pay attention to how much available credit you have, the total amount of available on cards and other revolving loans, and compare that to how much you are using. Try to stay under 30% of your total available credit if possible.
That ratio holds a fair amount of wait on your FICO score. If paying it down to 30% isn't an available option, look at increasing your current lines without utilizing more.
Jason Steele takes the long-view on increasing your credit score, “There's no need to delve into the intricacies of debt to credit ratios or worry about how many recent inquires you have. Pay your bills on time and carry very little debt. If you do these things, it's nearly impossible not to have excellent credit.”
Control your FICO score or it will control you! You don’t have to spend every waking moment worrying about your credit score but follow a set of easy rules to manage your credit and increase your score. You’ll get the money you need, when you need it and at the lowest interest rates available.
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