Credit is nothing to play with. It can work in your favor or completely work against you. Black Enterprise caught up with founder Christia’n Annice of eMillions+, a credit repair agency, who gave us four tips on how to increase your credit score.
(Image: Credit Karma)
1. Pay your bills on time.
Delinquent payments and collections can have a major negative impact on a credit score. According to FICO data, a 30-day delinquency could cause as much as a 90- to 110-point drop on a FICO Score of 780 for a consumer who has never missed a payment on any credit account.
In comparison, as stated on Equifax, a consumer with a 680 FICO Score and two late payments (a 90-day delinquency on a credit card account from two years ago and a 30-day delinquency on an auto loan from a year ago) would experience a 60- to 80-point drop after being hit with another 30-day delinquency.
2. Keep balances low on credit cards and other “revolving credit.”
When your balance is low so is your utilization percentage which is extremely important to your score. To boost your score, pay down a credit card with a high balance relative to its credit limit. Also, try and increase your credit limits. You can do this by calling credit card companies to negotiate.
3. Apply for and open new credit accounts only as needed.
Applying for new credit accounts for about 10% of your FICO score, so the impact is relatively small but still important to consider.
Open new accounts is a different scenario. If you only have had credit for a short time, don’t open a lot of new accounts too rapidly. As stated on MyFico, new accounts will lower your average account age, which will have a larger effect on your FICO® Scores if you don’t have a lot of other credit information.
4. Pay off debt rather than moving it around.
It is extremely important to pay off your debt. A lot of people use moving it to different cards as a strategy but, the only sure fire way to make sure that it is affecting your score in a positive way is to pay it off.
For more information on getting your credit in shape, click here.