An important financial concern that we often hear from clients is,\u00a0\u201cHow can I improve my credit score?\u201d\u00a0Now, I have to give a quick disclaimer that our company,\u00a0CameronDowning,\u00a0is not a credit repair\u00a0or debt consolidation service.\u00a0Our goal is to arm you with the education you need\u00a0to establish a strong financial foundation\u00a0\u2013 this often includes advice\u00a0on how to raise your credit score.<\/p>\n
If you\u2019re considering buying a home,\u00a0taking out a loan,\u00a0or you\u2019re getting yourself organized\u00a0after a season of personal financial challenges,\u00a0you understand that your credit score\u00a0may determine what you can and cannot do in life.<\/p>\n
The most widely used credit score are FICO scores.\u00a0FICO stands for the Fair Isaac Corporation.\u00a0Founded by William Fair and Earl Isaac in the late 1950s,\u00a0these two developed a mathematical algorithm\u00a0that predicted consumer behavior.\u00a0The result is a formula that determines your FICO score,\u00a0which is based on a number of underlying assumptions.\u00a0These scores are calculated only with information\u00a0that can be found on your consumer credit report,\u00a0which you\u2019ll want to check regularly.\u00a0The major reporting bureaus are TransUnion, Experian, and Equifax.\u00a0FICO scores have a base range of 300 on the low end\u00a0and 850 on the high end.\u00a0Every lender has different FICO score qualifications,\u00a0so if you\u2019re looking to get a business loan\u00a0or take out a mortgage and your FICO score isn\u2019t the greatest,\u00a0ask your lender whether you would qualify.\u00a0What I can say is if you\u2019re in the upper 600s you\u2019re doing OK. Could be better,\u00a0but if you follow my advice in this\u00a0blog\u00a0it shouldn\u2019t be long before you get to good or excellent credit.<\/p>\n
So you want to know \u2013 “What\u2019s the fastest way to raise my credit score?”<\/p>\n
Well, there are five categories\u00a0that the Fair Isaac Corporation looks at\u00a0when determining your credit score.\u00a0Here they are in order of priority:<\/p>\n
#1: 35% of your score is based on your payment history.<\/strong>\u00a0The number one thing lenders look for\u00a0is that you\u2019re paying them on time.\u00a0Even if you\u2019re carrying a credit card balance\u00a0and you\u2019re only paying the $30 monthly minimum,\u00a0make sure you pay that amount.\u00a0And this makes sense, right?\u00a0If you were a lender, wouldn\u2019t you want the person to whom you\u2019re lending money\u00a0to pay you on time?\u00a0This is a big deal.\u00a0So be vigilant with your payments\u00a0and make sure you pay on time, every time.<\/p>\n #2: 30% of your score is based on credit usage.<\/strong>\u00a0This is the amount owed,\u00a0relative to the total credit line.\u00a0The closer you are to maxing out your cards, the worse it is for your score.\u00a0Do your best to keep your balance well below 50% of your credit line, if not less than 25%.<\/p>\n #3: 15% is the length of your credit history.<\/strong>\u00a0Good credit history continues to work for you.\u00a0Don\u2019t necessarily close accounts once they\u2019re paid.\u00a0You may want to make an occasional charge simply to have more on-time payments on your record.<\/p>\n #4: 10% of your FICO score is your mix of credit use.<\/strong>\u00a0That is, your combination of credit cards debt,\u00a0retail accounts,\u00a0installment payments, etc.<\/p>\n #5: Another 10% of your score is based on new credit.\u00a0<\/strong>Opening one card may not have a big effect,\u00a0but opening several in a short space of time\u00a0may adversely affect your score in the short term.<\/p>\n These weightings are the ones provided\u00a0on the Fair Isaac Corporation website.\u00a0There are many websites now that claim to offer free credit scores.\u00a0One we recommend that is truly free is creditkarma.com.\u00a0They give you a TransUnion credit report and your credit score is updated monthly.<\/p>\n One last thing \u2013\u00a0Since your credit report\u00a0is the only source that FICO pulls from\u00a0in determining your credit score,\u00a0you\u2019ll want to make a habit of checking it often for irregularities.\u00a0What do I mean by that?\u00a0With identity theft as rampant as it is,\u00a0you have to be as vigilant as ever\u00a0to ensure that your credit score is accurate.\u00a0Comb through these reports\u00a0and check for errors.\u00a0Make sure there isn\u2019t a home address listed\u00a0that you don\u2019t recognize.\u00a0Make sure all lines of credit\u00a0on these reports are yours.\u00a0If you don\u2019t recognize a credit card\u00a0or if something is wrong,\u00a0report it immediately.<\/p>\n To access your reports for free,\u00a0go to annualcreditreport.com.\u00a0You are legally entitled to one free report\u00a0per year per agency.\u00a0Since there are three reporting agencies, a\u00a0good strategy is to pull one report every 4 months\u00a0from one of the reporting agencies.\u00a0Again, these reports are different than your credit score.\u00a0TransUnion, Experian, and Equifax\u00a0are the sources\u00a0from which your credit score is derived.<\/p>\n <\/p>\n Jonathan is an FIU alumnus, as well as a Co-Founder and CERTIFIED FINANCIAL PLANNER\u2122 of CameronDowning, LLC, a Registered Investment Advisory firm in Coral Gables, FL. He provides targeted financial advice to young professionals on personal wealth, student loans, employer benefits\/401ks, planning for a first home purchase, and estate planning. He is married to his beautiful wife, Lauren. For more on Jonathan, visit\u00a0<\/em>www.cameron-downing.com<\/a><\/strong><\/em>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" An important financial concern that we often hear from clients is,\u00a0\u201cHow can I improve my credit score?\u201d\u00a0Now, I have to give a quick disclaimer that our company,\u00a0CameronDowning,\u00a0is not a credit repair\u00a0or debt consolidation service.\u00a0Our goal is to arm you with the education you need\u00a0to establish a strong financial foundation\u00a0\u2013 this often includes advice\u00a0on how to […]<\/p>\n","protected":false},"author":25,"featured_media":10513,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[290],"tags":[375,9],"class_list":["post-10512","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-panther-perks","tag-guest-post","tag-panther-perks"],"_links":{"self":[{"href":"https:\/\/fiualumni.com\/stay-connected\/alumni-news\/newsroom\/index.php\/wp-json\/wp\/v2\/posts\/10512"}],"collection":[{"href":"https:\/\/fiualumni.com\/stay-connected\/alumni-news\/newsroom\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fiualumni.com\/stay-connected\/alumni-news\/newsroom\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fiualumni.com\/stay-connected\/alumni-news\/newsroom\/index.php\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/fiualumni.com\/stay-connected\/alumni-news\/newsroom\/index.php\/wp-json\/wp\/v2\/comments?post=10512"}],"version-history":[{"count":1,"href":"https:\/\/fiualumni.com\/stay-connected\/alumni-news\/newsroom\/index.php\/wp-json\/wp\/v2\/posts\/10512\/revisions"}],"predecessor-version":[{"id":15015,"href":"https:\/\/fiualumni.com\/stay-connected\/alumni-news\/newsroom\/index.php\/wp-json\/wp\/v2\/posts\/10512\/revisions\/15015"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/fiualumni.com\/stay-connected\/alumni-news\/newsroom\/index.php\/wp-json\/wp\/v2\/media\/10513"}],"wp:attachment":[{"href":"https:\/\/fiualumni.com\/stay-connected\/alumni-news\/newsroom\/index.php\/wp-json\/wp\/v2\/media?parent=10512"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fiualumni.com\/stay-connected\/alumni-news\/newsroom\/index.php\/wp-json\/wp\/v2\/categories?post=10512"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fiualumni.com\/stay-connected\/alumni-news\/newsroom\/index.php\/wp-json\/wp\/v2\/tags?post=10512"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}