While the exact algorithm is a closely guarded secret, there are many experts who concede you can improve your credit score quickly by making small changes to your lifestyle and spending habits. Make some small changes now and you’ll be in a great buying position when it’s time to take out your next loan.

The last few years have been hard on many of us in regards to loans, mortgages and late payments. But as things gradually improve and old debt is perhaps written off and starts its progress down your credit report, you have an excellent opportunity to start anew by raising your FICO score one good deed at a time.

1. Pay Off Your Cards Early

If you’re currently loaded up with credit and your cards are maxed or close to it, you’ll need to start your improved credit by paying down your loans as quickly as you can. Of course this is a no-brainer to most of us, but for the sake of argument, we should say that you’ve paid them down and you’re now able to pay off the balance of your cards every month.

The credit card companies like for you to be a bit risky since they can charge you a higher interest rate. To show that you’re risky, they often report your credit card debt right before the payment is actually due. This is when your balance is highest and high credit card balances mean lower credit scores. You can easily beat this system by setting up your automatic bill pay to send money to the credit card ten days prior to the actual due date.

2. Use 5 Percent of Your Card

You can also play a trick with FICO scores by using your credit cards for only 5 percent of their actual value. If you have a credit card with a $2,000 limit, you should not be charging up more than $100 per month. By charging up just a bit on your card and then paying it off you’re showing FICO that you can handle credit responsibly and that you’re not likely to charge things up and run into trouble.

The easiest way to set up this sort of arrangement is to have something regularly charge to your card, perhaps a cell phone bill or utilities. The card is charged, the cell phone bill is paid and then you pay off the card. Two birds with one stone.

3. Keep Your Accounts Open

Even if you’ve paid off all your debts, leave your credit card accounts open. It seems so satisfying to close the accounts and be done with it now that you’ve cleaned up from the past, but closing out those old cards shortens the life of your credit history. A long credit history helps raise your FICO score, so you want to keep your accounts online and active as much as possible.

Consider rotating your cards each month for your grocery purchases or your gas charges. Charge on one card and pay the bill with cash you’d normally be using for gas or groceries. The next month would have you use the next card in your wallet. There is no penalty in your FICO score for having many cards open and active so long as they are all current and have a low balance. In fact, having multiple cards may be just what you need to give your score solid footing again.

4. Balance Your Balances with Credit Cards

If you have one card that has a high balance and a few others with no or low balances, consider transferring part of the balance on the high card to the other cards to even things out. Having a balanced load across multiple cards looks as though you have more available credit since nothing is maxed out on your credit report. You may be able to take advantage of excellent deals for transferring money as well.

One thing you should be aware of when you’re transferring funds is the possibility of additional fees. If there is a very high fee for transferring funds, it may not be worth it for the points on your FICO score. On the other hand, if you can transfer money, pay a fee and then gain an exceptionally low interest rate on the transferred money you’re going to be in a much better position in the long run.

5. Monitor Your Credit Report

Finally, the most important element of a good FICO score is to be on top of your credit report. Check out your free report every year through the (actual) free report on AnnualCreditReport.com to be sure banks haven’t made any mistakes and that you’re not the victim of identity fraud. Both can certainly devastate your efforts to repair your FICO score, of course, and should be dealt with promptly.


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