5 Foolproof Ways To Raise Your Credit Score
Why aren’t my credit scores higher?
This question seems to be asked of me more than any other, aside from “What are rates today?”
Although I am not a licensed credit counsellor I do have years of experience assisting my clients with improving their credit scores. As a Mortgage Banker, working with customers to improve their credit scoring has become more and more important over the last 5+ years. These days, the difference between a 680 credit score and a 740 credit score can relate to obtaining a mortgage rate of 4% compared to 3.5%.
So it stands to reason that many mortgage professionals, myself included, have educated themselves on the credit scoring process and how to help their customers achieve higher scores.
So here are a few tips for you. These are the general rules of thumb to maintain the highest credit scores possible. For detailed information, please request for a full report on credit scoring and what specifically affects your scores from the credit bureau.
It stands to reason that your history of paying debts on time affects your score. No mystery here. Bottom line, pay your bills on time and your score will increase!
Length of credit
Not much can be done about this. The longer your credit history, the better your scores will be, assuming you pay on time. Therefore, a 65-year-old will generally have better credit scores than a 21-year-old, even if both have good payment histories.
A proportion of balance to available credit
This is IMPORTANT! You never want to use more than 30% of your available credit on any credit line. This is a little-known aspect of scoring. If your available credit limit is $3,000.00, you never want to charge more than $1000.00 on that card.
Use your credit! Contrary to what you may think, you are better off having more than one credit line (credit card). The trick is to have several (3-5) credit cards and make sure you never charge more than 30% of the available credit limit on any of them. Honestly, you are better off using 3 or 4 cards and charging less on each one than having only one card and using more of the available credit on that card, even if you pay it off in full each month! This may fly in the face of logic but it’s true.
Having your credit pulled multiple times will drop your score, period. There are a few exceptions. For example, if you are applying for a mortgage, you have a window (usually 15 days) of time where you may have other lenders pull your credit and those additional pulls will not drop the score.
Your credit score won’t become perfect overnight, but with diligence and perseverance coupled with responsibility, you can raise your score fairly quickly. So if your score isn’t too high right now, just follow these tips for a few months and you’ll see it rise before you know it.