The average FICO credit report score for US consumers is 691, according to Statistic Brain. Most consumers may pat themselves on the back for having a score that is higher than that figure, while others are kicking themselves for not being anywhere close. Regardless of where you currently fit within the credit spectrum, there are several quick ways that you can increase that score efficiently and legitimately.
Get a Credit Card
The common belief that having a credit card is a horrible idea in the first place is absolutely false. Studies have proven that you absolutely need to have at least one credit card in order to increase your credit score quickly and efficiently. This is primarily because of the fact that you need to establish a positive credit history with all three major credit card bureaus, and this is the most efficient way to do just that.
Pay Off the Cards You Already Own
Another quick way to increase the score is to pay down the balances on the credit cards that you already have. Keep in mind that sticking to the minimum payment only every month will only force you to pay out more money than you would’ve had to do if you paid off the balance in a relatively short period of time by increasing your monthly payments. Interest rates can truly cause your overall balance to progressively increase much sooner than you might think, according to Bank Rate, especially if you have limited experience with credit cards in general.
Pay Off an Installment Loan Gradually
Do not focus on paying off your installment loans, such as home mortgages and automobile loans, as quickly as possible. Doing so may seem to be the best course of action to take but can actually backfire on you and prevent you from reaching your goals. Keep in mind that your credit score is based on your credit history and overall account status, but you can’t build an extensive history for these accounts if you continuously pay off the full balance of these loans as soon as possible, according to Yahoo Finance. Give it a considerable amount of time to make sure that you are able to build the history that you need to end up with the score you want.
Do Not Use Your Cards Excessively
As mentioned earlier, it is important for you to have at least one credit card and to make sure that you are building an extensive payment history with your creditors in order to improve your score and enhance the quality of your credit report. How much you use the credit cards that you have, though, can have a negative impact on your score. Keep in mind that your credit utilization in general is 30 percent of the overall score, according to Statistic Brain. Therefore, you need to make sure that you use your credit cards wisely in order to receive the most benefit from them. Overdoing it and using these financial tools excessively may lead to harming your score instead of helping it.
Stay in Contact with Your Creditors
One of the worst things that you can do is ignore your creditor and credit card issuers. When they call you, it may be very easy to ignore the calls and let them roll over to your . However, there are two key reasons why contacting your creditors regularly will improve your credit score. First and foremost, you will be able to keep them posted whenever you are not able to make your payments, which can delay the negative reporting of those late payments. Second, you will be able to build rapport with them and eventually qualify for new incentives, such as increased credit limits.