Top Tips To Sweeten Your Credit Score


Its a three-digit number that carries a lot of influence over your future. It can dictate whether or not you’ll qualify for a home, car, or business loan. It can also be the deciding factor in whether or not you qualify for a low interest rate.

What exactly is a credit score and what factors contribute to its number?

A credit score is a number from 200 to 800 that reflects your payment and borrowing history. Are you a big spender? Do you make payments faithfully and on time? It’s what lenders use to decide a number of factors, including whether or not to lend to you.

There are three main reporting agencies: TransUnion, Experian, and Equifax. Can a credit score from these agencies be biased? The simple answer is no. Your credit score is a true and honest reflection of your debt and payment history. This means that neither a lender nor credit agency can “have it out for you.” You are the only person responsible for your score.

There are several factors that contribute to this score.

Type of Credit: Lenders want to see that you have a history of multiple types of credit. This can include credit cards, installment loans, and mortgages.

Amount of Debt: The more debt you have the riskier you appear to a lender. This means paying down or off debt is a great way to make yourself more desirable for a home loan.

Payment History: You want to be on time with every bill. This includes everything from cable and phone to credit card payments. Late payments may be reported to the credit reporting agencies and will negatively affect your score.

New Credit: Do NOT under any circumstances open new lines of credit, no matter how small, before you start looking for a home. Several new lines of credit will dock your score and may indicate to a lender that you are on a spending spree.

Credit History Length: Younger borrowers are always at a slight disadvantage because they have a shorter credit history. A longer credit history gives lenders a better picture of what kind of borrower you really are.

Be sure to check out your credit report three times a year at It’s free, easy, and secure. You’ll have to pay a nominal fee in order to see your score, but checking out your report can help you assess areas that need improvement or areas that have errors which need corrected.

To get the most favorable interest rates you’ll need a credit score of 720 or higher. Someone with a credit score of 520 will receive higher interest rates on loans, up to four percentage point than someone with a 720 score. With that in mind, here are five quick tips to improving your credit score:

Be diligent
Once per year, get a copy of your credit report. Scrutinize it and make sure the information is correct.

Don’t be late
Pay your bills on time. Late payments damage your score. Consider automatic payments through your bank account.

Know the FICO
Understand how your credit score is calculated and do what you can to improve deficiencies.

Make repairs
If there are errors in your report, correct them. The Federal Trade Commission is a good resource for information.

Get smart
Don’t max out your credit cards and pay the balance in full, if possible. Avoid opening new credit card accounts or closing down old inactive ones.

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