What is the Secret to Develop a High Credit Score?
What is the secret to having a high credit score?
1. Always pay your bills on time!
2. Don’t close old accounts!
3. Don’t apply for any new credit!
4. Don’t ever leave your balance at more than 30% of your available credit on each credit card!
So we’ve covered the basics, let’s jump right into it:
1. Order fresh new copies of your credit reports from all 3 bureaus: Equifax, Experian and TransUnion.
Credit reports are constantly changing. Therefore it is important to have up-to-date copies. Order your credit reports online through www.annualcreditreport.com.
2.Correct all inaccuracies on your Credit Reports.
Before you repair your credit, it’s a good idea to go through your credit reports very carefully, update ALL outdated addresses, personal info, etc. Especially look for; Late payments, charge-offs, collections or other negative items that aren't yours. Accounts listed as "settled," "paid derogatory," "paid charge-off" or anything other than "current" or "paid as agreed" if you paid on time and in full. Accounts that are still listed as unpaid that were included in a bankruptcy, Negative items older than seven years (10 in the case of bankruptcy) that should have automatically fallen off your report (you must be careful with this last one, because sometimes scores actually go down when bad items fall off of your report. Now it’s time to repair that credit!
3.What’s next after file is complete…?
Once you have your file squeaky clean, you will need to build your credit. A couple of ways to build credit are the traditional way and/or by adding yourself to a card as an authorized user. There are pros and cons to both methods.
Pros and Cons
The pros of the traditional way is that you will be the primary account holder for each account compared to the authorized user where you will be added to someone else’s account.
The Con of using the traditional method is that it takes much longer to develop history. 35% of your credit score consists of credit history so that plays a major factor when building credit.
The pros of an authorized user are that you obtain a higher credit score much faster than you would the traditional way. You can have a credit score of 700 or greater literally in days after the statement date of the credit card account you’re being added on to.
The cons are you when you are added to someone else’s account as an authorized user, you are depending on what the primary card holder does with his/her account. Also, certain banks don’t like seeing your credit report consist of only authorized users so you may get denied even if your credit score is up to par.
Process for building your score
· Traditional Way
Once your file is complete, you will need to start building your credit from scratch. The first card you can apply for is the Journey® Student Rewards from Capital One®. They will accept your application as long as you don’t have too many derogatory accounts (you shouldn’t if you followed the previous steps). They will usually approve you for a $300- $500 credit limit to begin with and after a few months of making payments and keeping your balances low, you can ask for an increase. Another card you can apply for is https://www.myjewelersclub.com/. They will approve you for a $5,000 limit credit card for their jewelry store. Once you become a member and make your first purchase of $100, they will report to all 3 credit bureaus! After one month of paying the Capital One and My Jewelers Club card and keeping the balance low, It should report to all three credit bureaus on your credit report. You can now apply for a Kohls credit card and you should get approved for at least $300 credit limit. If you follow these steps correctly and depending on how long it takes to repair your credit, you should be at a 700 credit score within 6 months of using this process!
· Authorized User
This process is also known as “piggy backing”. This is when you are added to someone else’s credit card account as an authorized user. The benefits of this is that whatever credit history and credit limit the card holder has on that particular card, you will benefit from it as well. Ex. The card holder has a Capital One credit card with a credit limit of $15,000, 4% balance and it’s been open for five years, if you were added to that credit card you, it would show up on your credit report. That would mean your score could increase from 40 to even 100 points just off that one card! So imagine adding a few of those cards to your credit report?? Exactly, you would be looking at a 720 plus credit score in no time! Again, we do offer these tradelines for sale. In an effort to save you money, we advise that you seek out a close friend or family member with great credit to be added to before purchasing. If you are interested in purchasing tradelines to add to your personal credit, please request tradeline availability via email at firstname.lastname@example.org.
You can visit creditboards.com and at the top of the page click on “Credit Pulls.” Here you can search a creditor, what bureau they pulled and score needed to get find out how previous consumers got an approval for a specific card. This is good to know before you apply for any credit.
4. Pay any existing credit cards and any revolving credit down to below 30% of the available credit line.
This step alone can make a huge impact on your score. The credit scoring system wants to make sure you aren't overextended, but at the same time, they want to see that you do indeed use your credit. 30% of the available credit line seems to be the magic "balance vs. credit line" ratio to have. For example; if you have a Credit Card with a $10,000 credit line, make sure that never owe more than $3000 (even if you pay your account off in full each month). If your balances are higher than 30% of the available credit line, pay them down. Here is another thing you can try; ask your long time creditors if they will raise your Credit Line without checking your FICO score or your Credit Report. Tell them that you're shopping for a house and you can't afford to have any hits on your credit report. Many will not but some will.
5. Never close your old credit card accounts.
Old established accounts show your history, and tell about your stability and paying habits. If you have old credit card accounts that you want to stop using, just cut up the cards or keep them in a drawer, but keep the accounts open.
6. Avoid applying for too much new credit.
Try not to apply for too much new credit. Let the accounts you already have build credit history. Each time you apply for new credit, your credit report gets checked. New credit cards will not help your credit score and a credit account less than one year old may hurt your credit score. Use your cards and credit as little as possible until the next credit scoring.
Throughout this process, always remember:
It takes up to 30 Days for any of these items to get reported and often longer to reflect on your Credit History Reports. Very often we must write a series of letters challenging the credit bureaus. Each time, we must allow them 30 days to respond. It can feel like a slow process, but hang in there, because it does work and the end result will save you a tremendous amount of money.
For more questions, check out our other articles, FAQ’s, and remember, you can always email us at email@example.com 24/7 for additional support.