How To Increase Your Credit Score 75-100 Points!
I am going to share how the FICO Scoring Model calculates your credit score and give you credit tips so you can dramatically improve your credit score.
CreditRepairNurse.com is a website that allows you to enter your negative credit items and it will automatically generate a letter that you can mail to the credit bureaus to dispute all of your negative items. I know from experience that disputing bad credit and following the credit tips that I am going to share with you here will dramatically raise your credit score quickly and reliably!
For some reason it seems that trying to figure out how your credit score is calculated is more difficult than understanding Algebra! However, FICO is simply a scoring model that is based on a mathematical algorythm (and even though no one knows the entire secret formula) the basic model is easy to understand and I am going to teach you in less than 5 minutes how the credit scoring model works. If you apply and follow this information your credit score will always be over 700!
Payment History makes up 35% of your credit score. Did you know that making one 30 day late payment will drop your credit score by 50-100 points overnight? And it takes 12 months to recover from a single 30 day late payment. This is actually why your credit score will drop so much when you are going through a short sale or foreclosure. It’s actually the late payments, the 30-60-90-120 day lates that cause your score to plummet!
So remember, never make a 30 day late payment! And it doesn’t matter if the late payment is a car payment, mortgage payment or a $25 gym membership payment! It will still drop your score by 50-100 points! And it can take up to 12 months before your credit score is fully recovered!
Credit Utilization is a fancy name for how much credit card debt you have in relation to your credit limits. For instance, if you have a credit card with a $1000 credit limit and you have an $800 balance you have utilized your credit limit by 80%. Anything over 75% will significantly lower your credit score. However, this is the easiest area to quickly improve your credit score. If you pay down a maxed out credit card to below 30% of your credit limit your score can increase by as much as 60 points!
So to have the best score possible keep all of your credit card balances below 30% of your credit limits.
One of the factors in how your credit score is computed is how long you have been using credit. This is why if you have an older credit card and you decide to close the account your credit score may go down 15-30 points. It’s better to try and negotiate a better interest rate on your older accounts rather than simply closing them.
So remember, don’t close out your oldest accounts.
The ability to maintain different types of credit is important for your score. You should have revolving accounts like credit cards as well as installment accounts like a car or mortgage payment or a student loan.
So, in order to have the best credit score you should have 2-3 major credit cards and 2 installments loans so you can build good credit. A secured credit card or a secured installment loan from a credit union is a great way to start building credit.
Recent Credit refers primarily to credit you have recently opened or tried to open, particularly in the past 6 months. When you apply for credit it shows up on your credit report as an inquiry. Each inquiry will impact your credit score approximately 3-5 points but if you apply for multiple types of credit these inquiries can really add up.
Having an excellent credit score should not be a mystery. Follow these simple rules and you can have stellar credit.
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