Does your credit score need some help? There are steps you can take to improve and achieve an excellent credit score. Learn how in this guide.
The average American has a credit score of 703 (see updated data), which is deemed as good. This type of score will allow you to take advantage of many offers, but there’s still a limit. If you want to have access to the best of the best, you want an excellent credit score between 750-850.
Is it possible to climb to the top when you’re one, two, or even three levels below it? Yes. But it will take some time and commitment. If you want to find out what steps you should do to aim towards an excellent credit score, keep reading.
Pay Your Bills on Time
There are five factors that impact your overall credit score. A FICO credit score takes into account the length, diversity, history, usage, and inquiries made on your report. All factors are credit you borrow from a lender, and paying your bills on time affects your score positively.
Paying the minimum balance each month is good, but paying more or the entire balance is better. If you can’t pay the minimum for all your accounts, aim to pay more on those with the highest interest.
Use a Secured Credit Card
Applying for and using a secured credit card helps build and raise your score. Those who apply for a secured credit card are guaranteed approval and receive credit equal to the funds you deposit.
This is the best method to use when it comes to applying for credit cards when you aren’t confident of approval. Remember, the more inquiries you make when applying for loans and credit cards, the more your credit score may drop. Hard pulls are more detrimental than soft pulls (they don’t show on your report).
Keep Credit Utilization Low
It’s best to apply only for credit you can afford to pay. Whether you have 2 credit accounts or 10 credit accounts, you want to keep the credit utilization low on each. The amount of money you owe plays a huge role in your credit report and score.
It’s best to keep it as low as possible. If you want to shoot for an excellent credit score range, you want to utilize less than 10% of the credit each month.
If you’re struggling with mounting interest payments and high balances, it would be a wise choice to consolidate your debt. You shouldn’t worry about resolving debt in fear it may affect your credit score.
While it does have an immediate effect on potentially dropping your score, you will raise your score in the long run. In no time, you can see your points rise as you rebuild your credit.
Keep Old Accounts Open
Even if you pay off a credit card and no longer use it, don’t close it. Doing so will shorten the length of your credit history. This has a huge impact on your overall score. Keeping the account open when it’s paid and clear, looks great on your history and helps raise your score.
Building up an Excellent Credit Score
It takes weeks to months to get to an excellent credit score depending on your starting point. The important thing to note is that it’s achievable no matter where you stand. If you want to reclaim your financial stability, addressing issues on your report will take you far.
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