How to Get a High Credit Score

Most of us want to know our credit scores. But knowing your credit score and knowing how to improve it are two different things. A credit score is a number that provides a quick estimate of how good a credit risk you are. There are several credit score systems, but the one that is by far the most common ranges from a low of 300 to a maximum score of 850. This is the FICO score named for Fair, Isaacs &Co., who provide this credit score system to businesses. This guide will explain how your FICO score works and how to get a high credit score.

Instructions

1

Understand what makes up your credit score. There are five components, each of which counts as part of your score. These are 1) on-time payment history (35% of your FICO score), 2) Total debt you owe (30%), 3) how long you have used credit (15%), 4) recent account changes (10%) and 5) what types of credit you have (10%).

2

Make timely payments. This is the single most important thing you can do to get a high credit score. If you have had late payments in the past, dont be discouraged. There is no quick fix, but your recent payment history (1-2 years) is weighted more heavily. So if you make payments on time for a year or two, this will bring your credit score up. Another point to be aware of is that its not only whether you are late on a payment that counts, but how late. If you run into real trouble, contact creditors and do whatever you can to prevent going over 30 days past due.

3

Total up your outstanding debt obligations. If you have a lot of debt compared to your income this will lower your credit score more. The way to fix this problem is to pay down credit cards and pay off some other obligations. Home mortgages complicate this a little because the amount is large compared to most other debts but doesnt hurt your credit score. The main reason is this: when a person rents, the rent money is not available to service debt. However, when someone buys a home the rent money becomes available to pay the mortgage, increasing the total amount of income available to pay debts.

4

Raise your credit score simply by staying an active user of credit. The longer your credit history the more stable and reliable you look on a credit report. For this reason, even if you are fortunate enough to pay off everything you owe, keep at least 1 or 2 credit accounts open and make regular payments.

5

Dont open, close, or apply for a lot of credit accounts. This is how you can raise your credit score the fastest. How many credit accounts you open and close is factored into your credit score. However, only your recent history (6 months to a year) is counted here. Occasionally opening or closing an account wont count against you. Avoid opening a new credit account on impulse no matter how tempting a companys introductory offer may be.

6

Avoid junk debt. The final factor that your credit score takes into account is the mix of debt you have. Long term secured debt like a mortgage or a car installment loan is better debt to have, dollar for dollar. Credit card debt is not secured and usually has a short repayment period and should be kept to a fairly low level. The fact that you have a credit card isnt negative in and of itself. What counts off is having too large a proportion of your total debt as this type of debt.