How to Bump Up Your Credit Score

The critical necessity of a good credit score is now more important than ever. With the global credit crunch, banks and all financial institutions are requiring high credit scores for any type loans. Having a lower credit score can add up to big money over time when a higher interest rate is the only option. There are things that can be done to bump up your credit score and make life a bit less expensive.

Instructions

1

Make payments on time every time. This step is obvious but true. Always make the payments on time. Pay online or by phone and use an online calendar if necessary with reminders set for each bill due date.

2

Know the factors that make up your FICO score.
Payment History - 35%
Amounts Owed - 30%
Length of Credit History - 15%
New Credit -- 10%
Types of Credit Used - 10%

3

Apply for a secured credit card if you don't have a credit card. You will need some source that sends your payment history to the credit bureaus. See the resources link below for more information about secured credit cards. Don't open up too many cards, though. You don't want to be overextended.

4

Request your credit report and credit score. These are usually two separate processes. Many online sites offer to send you a credit report for free. Create a spreadsheet and track your progress and watch your credit score rise.

5

Buy a house if you can if you don't already own one. It might be difficult to get a competitive rate relative to your credit rating, but there are a few options. FHA mortgage loans are not as punishing as far as interest rates go. You may have to work with a mortgage broker to secure the best rate too. Making a regular, payment on a house that you can afford and is within a reasonable percentage of your income on time every month will go a long way in bumping up your credit score. But if the payment is a strain or if you are paying much more than you would renting, you might end up in more trouble so this really needs to be thought out. There are other ways to boost the credit score.

6

Don't close existing credit card accounts. This will actually ding your credit score. Keep it open and cut up the card or just charge $25.00 a month on it and pay the balance every month.

7

Get creative if you must. There have been a couple of examples in the press lately where adults had actual loan documents drawn up for a loan they secured from their parents. The company doing this reported the timely payments to the credit bureau and that helped bump up their credit score and got them back on track.

8

Don't piggyback on anyone else's credit. Some people do this on their parents' account to leverage their good credit, but if for some reason the parents' credit score goes south, the credit score of the child will suffer or vice versa. This is a risky venture and although it can work, the risks need to be weighed. The credit reporting agencies are vacillating in accepting piggybacking and reporting it so things are changing and in flux.