2018 is here and with it comes new goals, hopes, and optimism. That includes some ambitious expectations for the new year, as millions of Americans make the resolution to finally get out of debt, save to buy a house, or just improve their finances. Of course, getting your credit score in New Year’s form is essential for any of those, so we present you our 18 ways to improve your credit score in 2018:
- 1. Pay down your credit card balances to build up your score.
Your credit utilization ratio accounts for 30% of your credit score, so the most effective way to improve your credit score is to pay down your revolving (credit card) debt. While you may hear that paying debt down to 30% of the available balance is a good mark, an ideal credit utilization ratio is actually around 10% or lower.
- Never miss a payment!
The first thing any lender wants to know is whether you’ve paid past credit accounts on time. According to FICO, 96% of people with a FICO score of 785 or greater have no late payments on their credit reports.
- Sending your payments in early may also help your credit score.
Each creditor has a report date when they send their information to the credit bureaus. If you use your credit card a lot and pay it off at the due date, the higher balance will always show on your credit report that month. But if you make payments well before you receive your bill and the due date, the higher balance won’t even report.
- Check your credit report regularly.
It’s important to make sure that there are no errors on your credit file. A significant number of credit reports do have these errors, which can lower your score. These days, you also need to make sure that your identity hasn’t been stolen or compromised, which affects up to 1 in 8 Americans every year.
- Don’t be tempted by new credit card offers or take on new debt.
You can have these solicitations stopped being sent to you by “opting out” of these offers. Go To Optoutprescreen.com.
- Paying off a collection will NOT increase your score.
It’s not the balance, but the fact that the account went into collection status is what is essentially hurting your score. But your score will increase if the collection agency is willing to delete the account from your credit report.
- Don’t go without credit.
You only have a credit score if you have an active credit history. Some credit scoring systems cannot calculate a score if no balance is reported to the credit history within the last six months.
- Don’t allow incorrect or inaccurate information to stay on your credit report.
If you notice that there is something incorrect listed on your credit report you should have it corrected or removed.
- Become an authorized user for someone else’s credit card.
Once you’re authorized, the new positive trade line will show up on your credit as if you’ve had it for the duration. It’s important you do this correctly – it has to be a credit line in great standing – and with someone you trust!
- Request an increase to your credit line.
As long as you don’t use the new debt, this will improve your credit utilization ratio, bumping up your score. Of course make sure not to apply for new debt, just increase an existing credit line.
- If you want a great credit score, don’t pay all your debt down to zero.
FICO calculates a significant portion of your score by your credit utilization ratio, but if you pay your balances off completely, you won’t show an established payment history they can use in their calculations (you won’t have any payment.)
- Try to keep seasoned credit lines open and in good standing.
15% of FICO’s scoring is calculated in regards to your history of credit, with favor given to well-seasoned accounts that have been open and in good standing longer. (Anything that is older than 24-48 months is helping your credit score.)
- Keep the right mix of credit card, revolving, installment, and mortgage accounts.
Since 10% of your score is calculated by what balance of different kinds of credit you keep, it’s good to hold revolving accounts, mortgage debt, and installment debt, if possible.
- When using debt for big-ticket items, shop around in clusters.
10% of your FICO score depends on whether you have applied for credit recently, so you want to avoid too many credit pulls and “hard” checks. So when you “shop around” for big purchases like a car, mortgage, etc., make sure it’s all within a 30-day window. FICO won’t factor those pulls into your score, and even if they are spread out within 45 days, they’ll only be treated as one credit inquiry.
- Add missing accounts to your credit report.
A surefire way to build your credit is to add positive accounts that aren’t currently being reported. Cell phone companies, Internet providers, utility companies, and medical billers often don’t bother reporting credit (because it’s not mandatory.) But if you ask them to do so, they often will post a new but well-seasoned, positive new trade line to your credit report.
- If you’ve missed payments and have an account in collections, they’ll often agree to erase any negative credit reporting for that account if you pay it off in full. Called “pay for deletion,” erasing this negative item from your credit report can really help your score – just get it in writing!
- Check with Equifax if your data was hacked – and consider some sort of
The big credit score news in 2017 wasn’t good, as Equifax, one of the big three credit bureaus, saw its database hacked with up to 143 million Americans affected. To ensure that your identity and credit is protected, go to TrustedID.com and enroll in their free credit protection program, monitor your credit regularly, and consider some form of credit freeze or lock.
- Call Blue Water Credit if you have any questions in regards to your credit score or credit report, including how you can improve it in 2018! We’re the nation’s leader in legal and ethical credit repair, with most of our clients enjoying significant boosts to their credit scores within just 90 days or less.
Have a great 2018, everyone!