9 Tips to Raise Your FICO Credit Score

Posted by Bonnie on December 28th, 2008 filed in Credit Advice, Credit Score

The fastest way to raise your credit score is to never let it fall. However, circumstances such as losing your job or medical emergencies can do you in. The fastest ways that you find to raise your credit score could backfire. The best advice is to improve your credit responsibly over time. So here are some pointers for raising your credit score:

Always pay your bill on time.

Always pay your bill on time. Sorry, but I can’t emphasize this enough. Even if you owe $5, pay it on time.

Lower your debt to credit limit ratio.

Close credit cards that are store specific. You should never have more than one of these, because they reduce your credit score. Each one you apply for can reduce your credit score by 20 points.

Don’t use credit cards for large revolving debt of more than 50% of your overall credit limit. For instance, don’t charge $1,000 every month and pay it off if your credit limit is less than $2,000. If you do this repeatedly, you will lower your credit score. If you have multiple credit cards, this will most likely be based on your overall credit limit on all your credit cards.

Having credit cards and installment loans, and paying them on time, will raise your credit score. Someone who has managed credit cards responsibly has proven to be more credit worthy than someone who does not have any credit cards.

Don’t apply for multiple credit cards at one time. Credit applications and inquiries are logged on your credit report. If you apply to three different credit card companies, the third one will see that you have applied for two other cards. They could turn you down just because they are afraid the other two will approve you. For example, if you get two or three credit cards at one time and charge them to the max, you will probably not be able to afford the payments. Most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. These are typically treated as a single inquiry.

Don’t close multiple unused cards at one time. Leave longer term cards open when possible. You want to show that you have available credit, but not so much that your debt to income ratio will suffer. Closed accounts still show on your credit report.

To rebuild credit, get a secured credit card. The deposit you make will be your line of credit, but the deposit is held by the credit card company. You still have to pay at least the minimum payment before the due date each month.

What is a Good FICO Score?

You have a FICO score for each of the three credit bureaus. Your score can vary from credit bureau to credit bureau based on when your credit record was last updated. This score affects how much and what loan terms, such as interest rate, that lenders will offer you at any given time. So to get better interest rates and loan terms, raise your FICO score.

It is called a FICO score because the score is generally produced from software developed by Fair Isaac and Company. However, many lenders use their own credit scores and ranges which often include the FICO score as well as other information about you. For instance, they may use your employment history.

Below is a chart that shows the typical FICO ranges.

FICO Score Chart
Excellent:	750 to 850
Good:	720 to 749
Fair:	660 to 719
Uncertain:	620 to 659
Risky:	300 to 619
Average U.S. Credit Score is 693
based on http://www.nationalscoreindex.com