20 Ways To Increase Your Credit Score

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1. Always pay your bills on time

• This is very important as late payments; also called delinquencies reduce your credit score by tens of points. Although the payment of your utility bills, such as phone, cable and electricity, is not recorded in your credit report, some cell phone companies may report late payments to the credit-reporting agencies, which could affect your score.

2. Try to pay your bills in full by the due date.

• If this is not feasible, pay at least the required minimum amount shown on your monthly credit card statement.

3. Try to pay your debts as quickly as possible

• Banks love it if you don’t pay your debts quickly as they can continue to charge you interest on the full debt. However, large amounts of debt hurt your credit score.

4. Avoid going over the credit limit on your credit card

• Try to keep your balance well below the limit. The higher your balance, the more impact it has on your credit score. Typically, experts recommend you should keep your balance less than 50% of your credit limit

5. Reduce the number of credit applications you make

• If too many potential lenders ask about your credit in a short period of time, this may have a negative effect on your score. It is recommended that if you are shopping around let’s say for a mortgage that you bunch your applications within a 14 day timeframe. If you do this, the reporting agencies group those lenders enquiries together as one and it does not affect your credit score as much. However, your score does not change when you ask for information about your own credit report.

6. Ensure you have a credit history.

• It is possible that you have a low credit score because you do not have any record of using credit that is, owing money and paying it back. In that case the easy solution is to get a credit card and start using it to build credit. You may need to start with a secure credit card. This is a credit card for which you deposit a specified amount which is tied to the credit card you receive.

7. Add an instalment loan to your credit profile

• Your credit score can get a big boost if you show that you are responsible with both major kinds of credit: revolving (credit cards) and instalment (personal loans, auto, mortgages and other loans).

8. Don’t forget to use your older credit cards

• Generally, the older your credit history, the better. But if you stop using your oldest cards, the issuers may decide to close the accounts or discontinue updates to them on the credit bureaus. The accounts may still appear, but they won't be given as much weight in the credit-scoring formula as your active accounts. It is advisable to start using those older credit cards as they get more weight in calculating your credit score.

9. Contest old negatives

• It may be beneficial to contest old negative items that are still showing on your credit report, especially when the time for which they should continue to show has passed. Credit reporting agencies make mistakes too, and you should make sure you contest and correct errors that show on your credit report. This one of the reasons why you should periodically obtain copies of your credit reports from the three reporting agencies.

10. Setup Payment Reminders

• Making your credit payments on time is one of the biggest contributing factors to your credit score. Some banks offer payment reminders through their online banking portals that can send you an email or text message reminding you when a payment is due. You could also consider enrolling in automatic payments through your credit card and loan providers to have payments automatically debited from your bank account, but this only makes the minimum payment on your credit cards and does not help instil a sense of money management.

11. If you have missed payments, get current and stay

current. • The longer you pay your bills on time after being

late, the more your FICO score should increase. Older credit problems count for less, so poor credit performance won't haunt you forever. The impact of past credit problems on your FICO score fades as time passes and as recent good payment patterns show up on your credit report. And good FICO scores weigh any credit problems against the positive information that says you're managing your credit well.

12. Collection Accounts Stay

Be aware that paying off a collection account will not remove it from your credit report.It will stay on your report for seven years.

13. Apply for and open new credit accounts only as needed.

Don't open accounts just to have a better credit mix – it probably won't raise your credit score.

14. Have credit cards – but manage them responsibly.

In general, having credit cards and instalment loans (and paying timely payments) will rebuild your credit score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.

15. Remember that closing an account doesn't make it go away.

A closed account will still show up on your credit report, and may be considered by the score.

16. Don’t apply with your spouse or partner for the same account or

instalment loan• Make sure you don’t apply for loan

products jointly with your spouse or partner. If you do this, all the negatives related to that account affects both parties equally. If the account goes into collection, the collection shows on both accounts.

17. Avoid the 'rejection loop'.

• There's a nightmare scenario you need to avoid, called the rejection loop. When you are rejected for credit the first time, please don’t go ahead and apply at another bank again. This is because chances are you will be rejected again and it becomes a vicious cycle. Each subsequent lender will notice that you have been actively shopping for credit recently, and that is a big red flag in the opinion of the lenders. The best thing to do after the initial rejection is to request your credit report in order to determine why you were denied credit in the first place.

18. Use any savings to pay off debts.

• The amount of outstanding debt you have is part of the info lenders have access to, so minimising this is a clever strategy. In general, you'll be better off by using savings to pay off expensive debts anyway.

19. Ask For A Credit Limit Increase

• Since one factor that is used by FICO in computing your credit score is the ratio of your account balances to the credit limit on each of your accounts. If this ratio (also called the credit use level), is greater than 50%, your credit score is adversely affected. Getting a credit limit increase will lower this ratio and help boost your credit score. It’s important that you don’t use this new increase when you get it, otherwise you will return back to square one!

20. Focus Your Effort on the Most Important Factors

• In raising your credit score it’s important to focus your attention on the factors that will help boost your score most rapidly. These factors are Payment punctuality and credit use levels (that is balance/credit limit). These two account for 65% of the FICO scoring equation. It’s only sensible that you should focus your efforts on these two for the quickest result.