Trying to engineer a better credit score for yourself is kind of like trying to diagnose engine trouble without lifting the hood of your car. You can sense the problem a number of ways, but you can’t look in and see what the difficulty is. That’s exactly the way it is with the algorithms which determine your credit score. Each one of the three Credit Reporting Agencies has a different way of determining how to score your credit. The thing is, these determining factors are not made public. Through trial and error, however, people all around the world have observed how specific actions influence credit scores. By following these insights, most people can jack up their credit scores into “Very Good” or “Excellent” ranges in no time. Here are some of the methods that you may be unaware of.
- No Bad News is Forever. Credit Reports contain the worst information that exists about you, financially speaking at least. That’s why issues like bankruptcy, tax liens, and accounts in collection drag down your credit score. But the good news is, bad credit report items eventually disappear, meaning that you could get a clean slate in 7 to 10 years. That’s still a long time, but it’s short enough to mean that a bad mark on your credit isn’t a life sentence.
- It’s OK to Check Your Credit Score. Your credit score can take a hit if it’s checked by a financial institution preparing to give you a loan. This happens because there is the suggestion that you might be about to take on more debt, which might make you more financially vulnerable. However, lots of people think that simply checking a score on one’s own is enough to do the same damage. It’s not. In fact, it’s a sign that you’re a responsible consumer, interesting in keeping your credit on solid ground.
- Closing Accounts isn’t Necessarily Good For Your Credit. It’s possible to have too many or too few credit accounts, but there is no golden number. You should never cancel your oldest account that’s in good standing. This is a boundary marker that shows how long you have been a credit customer, the longer in the rearview, the better. What’s more, having a number of open credit accounts can help you by increasing the maximum credit you could draw. If you aren’t using any or most of this potential credit, this demonstrates that you are living well beneath your means. However, if you have 15, 25 credit cards, or more, this can be a red flag. For one thing, this will be hard for you to keep track of responsibly. For another thing, the credit reporting agencies might just worry that you could max out all your credit at once and flee to Guam. I like having fewer than 10 such accounts, but you may be able to handle more.
This article is by no means exhaustive, because these are complicated topics. Click through to the attached links to see lots more helpful hints. You’ll start to understand how credit works, and before you know it, you’ll see big changes in your credit score.