Having “Good Credit” is a popular subject in the world.
Golden Financial Services highlights the nine best ways to Build Good Credit and Increase Credit Score.
Nine Tips to Increase Credit Score
1. Build a High Credit Score, not High Credit Card Debt – Increase credit limits when you can
The idea is to raise your credit limits, while keeping your balances low. You want to build a high credit score and not high credit card debt.
After paying a credit card on time for nine months straight, assuming you’re doing everything else right, and keeping your overall credit card debt low, it’s now time to request that your credit limit is increased on at least one of your cards. You don’t want to request this too often because you don’t want too many inquiries on your credit report, which could lower your credit score.
A good time to request an increase on a credit card would be after 9 months of good practicing. That is usually a safe time to pick the account that you have been doing best on for the longest time-frame, and request for a credit increase on that account.
Continue increasing credit limits whenever you can. This helps to build a high credit score and not high credit card debt!
Do not pay minimum payments on maxed out and high credit card debt.
2. Utilize Less Than 30% of Your Credit Limit – Balance to limit ratio
The “utilization” on your credit cards is a major factor that helps to determine your credit score. It helps to increase your credit score when you are utilizing less than 30% of what your credit limit is. This also keeps you out of high credit card debt!
Example: If you have a credit card account that has a $500 limit and your balance is below $150, that’s good because your total credit card debt on that account is below 30% of what your limit is.
3. Pay Your Bills on Time
You can actually establish a good payment history with the credit bureau’s after only staying current on your credit cards for only 3 consecutive months.
Don’t ever be late.
If you have credit cards, set them up online so the balances are paid off at the end of each month automatically. You can usually set this up at the credit card companies online bill pay area. This will allow you to maintain a perfect payment history on these accounts, low credit card debt and all while increasing your credit score.
4. Remove collection marks
Collection marks can really lower your credit score. It is very easy to dispute a negative collection mark and have it removed from your credit report. If you pull your credit report after clicking on the picture above and see that you have negative marks that don’t look familiar or that are definitely not yours, you can dispute them right on the website. Once you are a member, just look for where it says to dispute a mark. There will then be directions that walk you through how to dispute a mark. If you dispute the mark, the collection agency now has 30 days to respond with proof that what you’re saying is false or verification that it is your account and you do owe the money. If they don’t respond, the mark will fall off your credit report automatically.
You can also join a reputable credit repair service. Give us a call regarding credit repair services and we will connect you with a credit repair specialist that we trust, from an “A”+ rated credit repair company.
If you see a collection mark on your credit report that is yours, you can call the collection agency and pay it off. However, make sure that if you pay it off, the collection agency agrees to have it removed from your credit report and not just report it paid. A lot of the time people will pay off collection accounts, but the accounts will remain on their credit report still negatively affecting them. Make sure the collection agency agrees in writing to have the account removed from your credit report at the time you pay it off. Sometimes paying off a collection account and not having it removed can make your credit score go down, so be careful.
Here at Golden Financial Services we specialize in settling debt. If you have high collection debt or credit card debt that you would rather have us settle in order to save you money, give us a call for a free quote and to see how much money we can save you.
5. Monitor Your Credit Report Monthly
Creditreport.com is a great site that most of our clients use after graduating on the debt settlement program in order to monitor and build their credit score. Creditreport.com works great because of the fact that you will get emailed or text message alerts whenever your score goes up, when it goes down, when something negative falls off your report, when something negative goes on your report, etc… Monitor your success!!
6. Use Credit Cards
If you use your credit cards once each month and just to buy gas or small purchases, then pay all of the balances off in full each month, this is the best practice. You want to show lenders that you are responsible with using your cards. If you get a credit card and keep the balance at zero dollars, but have not used the card once in twelve months, this is not helping you. Use your cards, and pay them off in full each month or at least keep the balance below 30% of what the limit is. Keep in mind; if you are paying your accounts off in full each month, you are also saving money in interest.
If you are new to the world of building credit, then you may need to start with getting a secured credit card where you put up real money as collateral. This is a guaranteed way to get your first credit card if you have no credit and cannot get approved for an unsecured credit card.
7. Have Secured Debts and Unsecured Debts – Mix of accounts
It is good to have revolving and installment loans that you are paying on. Creditors like to see that you have a mix of accounts. Revolving debt is credit card debt and installment loans are like your mortgage or car payment. It will help to increase your credit score when you show that you have good payment history on revolving and installment loans.
8. Don’t open too many credit cards that you are not using
Your credit score can actually go down if you open too many credit cards and never use them. The idea is to show creditors that you can use cards responsibly. Have two or three credit cards and one or two installment accounts like a car or mortgage payment, then practice following all the best practice rules on this page, and your credit score will continue to rise.
9. Adding Someone as an Authorized User or Joint Account Holder to Increase Credit Score
If you have a few credit cards that have a balance less than 30% of what the limit is and your credit score is high, then adding your son or daughter to one of your best credit cards would be a great way to help them build credit fast. You can add someone to your credit card as an authorized user or as a joint account holder.
As an authorized user your son or daughter will have permission to use the card and it will reflect on their credit report. If you add someone as a joint account holder, they will also hold the responsibility of that card, meaning they would be equally and fully responsible for the debt.
This method can help to increase someones credit score fast!
Start today on the path towards reaching your goals of having a high credit score or just increasing your credit score.
It’s really not that difficult to do, but takes practice, perseverance, motivation, knowledge and hard work!
Is it too late and you already have maxed out credit card debt where it’s near impossible to follow these rules? Credit card relief programs can assist you with paying off these high balances. In the end you will be debt free and you can then start working to increase your credit score by following these rules.
Whatever the case is, here at Golden Financial Services our financial specialists are here to assist you with any questions you may have about increasing your credit score or credit card relief programs at 1-866-376-9846