5 Ways to Increase Credit Score to 800In a world that is driven by consumerism, it is very important to have good credit score. A good score makes it easier for you to secure important loans such as car, home or study. Most importantly, it makes you an attractive prospect for the financial institutions.
Here are top 5 ways to not only improve but also increase your credit score to 800 and above.
1. Evaluate your credit reports: there are three main credit reporting agencies - Experian, TransUnion and Equifax, that keep detailed information about your credit that can be made available upon request. According to Fair and Accurate Credit Transactions Act, these companies must provide a free copy once every year, if requested. This report comes handy when you are about to make a big purchase or need to cross check a mistake you found in a report. If you are someone who is on the path to fixing their credit, then it is recommended to check one report from each agency once every 4 months. That way you get access to three reports for free every year with the most current information about your credit. You obviously have the option of accessing these reports anytime and ad many times as you like by paying the fee.
2. Keep your Credit Utilization Ratio under 10%: Since this aspect has the maximum impact on your credit score, fixing it alone can make a lot of difference. In an ideal situation, Credit Utilization Ration should be less than 10%. The first most important thing is to pay your credit card balance in one go, rather than going from month to month. The interest rates not only add up really quick, they are also bad for your credit utilization ratio. Another trick to keep your credit balance in check is to make multiple payments in a month so that your balance low at all times.
3. Consider Getting a Secured Credit Card: This is especially helpful for people who do not have a credit card at all. A secured credit card is issued by the bank and has low limit. The customer is required to pay security deposit upfront, making you less risky for the bank and flexibility to open a small line of credit. These type of credit cards are typically issued to help people build credit. As soon as you achieve good credit score, you can request the bank to change it to unsecured card.
4. Have a Diversified Credit Profile: since credit mix accounts for 10% of your credit score, it holds an important place in your credit improvement strategy. Having variety of credits means you can responsibly manage all kinds of debts. However, remember to not take out a debt that you don't really need. But being strategic with your borrowings can go a long way in establishing good credit score.
5. Debt Consolidation: It doesn't matter if you have one large balance, what impacts your credit score most is multiple small ones. Paying a minimum amount on all credit cards will impact your credit score more negatively than paying one off in full. It is always better to consolidate these small balances into one large balance and pay off that one credit card in full. This will not only make your debt more manageable, but also improve your credit score.