Smarter Living
Raising your score comes down to diligence.
By Mike Zimmerman
December 1, 2017
By Mike Zimmerman
December 1, 2017
![The #1 Trick To Boosting Your Credit Score (3) The #1 Trick To Boosting Your Credit Score (3)](https://i0.wp.com/bestlifeonline.com/wp-content/uploads/sites/3/2017/11/shutterstock_607938245.jpg?quality=82&strip=1&resize=640%2C360)
Your credit score is to your financial health what your blood pressure and lipid scores are to your physical health. And it's not just for borrowing money. Want insurance? The underwriter may check your credit score before you get a policy. Some employers will check your credit score before hiring you.
If you're considering a purchase that requires borrowing, or if you're thinking of refinancing your mortgage, it pays to get your score from FICO six months to a year before filling out that credit application so that you'll have time to make changes, if necessary. And while any score above 750 is acceptable, the best loan terms go to guys who score above 780. To boost your number, here's what you need to know. And for more great wealth advice, here's The Best Way to Buy Real Estate.
1
Pay it off.
![The #1 Trick To Boosting Your Credit Score (4) The #1 Trick To Boosting Your Credit Score (4)](https://i0.wp.com/bestlifeonline.com/wp-content/uploads/sites/3/2017/11/how-to-ask-for-a-raise-paperwork.jpg?quality=82&strip=all)
The fastest way to hike your score is to pay down existing debt. You want your credit-card balances as far below their limits as possible. In fact, says Barry Paperno, former consumer operations manager at Fair Isaac Corporation, if you take a maxed-out card and pay it off in one big chunk, you could see a dramatic increase in your score. Liz Pulliam Weston,author of Your Credit Score: How to Fix, Improve and Protect the 3-Digit Number That Shapes Your Financial Future,says the sooner you take steps to improve your credit, the better off you'll be. The longer you maintain your open accounts with on-time payments, the higher your score will rise. How much and how soon? Impossible to say, since every guy's situation is different, says Paperno. But rise it will. For more savvy tips on how to use your money, check out our guide to The Best Way to Buy Real Estate.
2
Fix any errors.
If you see any mistakes on your credit reports, contact the lender and the reporting agencies, challenge the accuracy of the incorrect data, and get any resolution in writing, says John Ulzheimer,president of the Ulzheimer Group and author of The Smart Consumer's Guide to Good Credit. This is another great reason to start your credit-score crusade months in advance, because errors will take some time to resolve–although the credit agencies are allowed only 30 days to complete their investigations. Being able to fix things is one of the 20 Secrets Salespeople Don't Want You to Know.
3
Make it automatic.
It's common sense, but it must be said: Never, ever pay late when it comes to credit cards and other loans. "It's a signal that something is wrong," says Pulliam Weston. "Especially if you've had a long history of good credit, one late payment can knock 100 points off your score." Too busy to remember to mail that check every month? Set up a recurring payment online. Late payments on utility bills usually aren't reported, but if an account goes into collection, your score will suffer. If you have past black marks, there's still good news, says Weston: "Your most recent actions have a bigger impact than past actions."
4
Spread it out.
![The #1 Trick To Boosting Your Credit Score (7) The #1 Trick To Boosting Your Credit Score (7)](https://i0.wp.com/bestlifeonline.com/wp-content/uploads/sites/3/2017/10/credit-card-debt-e1536951785796.jpg?quality=82&strip=all)
"It's better to have small balances on a bunch of cards than it is to have one big balance on one card," says Weston. If you have more than one credit-card account, spreading out the balances between the cards could help your score slightly since you're lowering your balance-to-credit-limit ratio on each card. However, and it's a big "however," says Paperno, don't go out and open a couple of new credit-card accounts to spread another balance around. New accounts, and the credit inquiries to open those accounts, could eat into any point gains you might get from lowering balances. You could even hurt your score more than help it. Explore your wealth options by getting to know the 14 Youngest Billionaires in America.
5
Forget perfection.
![The #1 Trick To Boosting Your Credit Score (8) The #1 Trick To Boosting Your Credit Score (8)](https://i0.wp.com/bestlifeonline.com/wp-content/uploads/sites/3/2017/11/shutterstock_626435909.jpg?quality=82&strip=all)
We all like to be the best, no doubt. But in the case of FICO scores, once you hit 720, that's the median. Hit 780, and it's time to focus on some other number, like a tee time. "Having a score of 780 as opposed to 820 will do absolutely nothing as far as getting you better lending rates," says Paperno. "There's very little difference in terms of risk because there are so few people who score that high."
6
Consider rapid rescoring.
Some lenders, such as mortgage brokers, offer "rapid rescoring," which can recalculate your credit score in days. It sounds great, but it helps only in certain situations. "It's really 'rapid credit-report updating,'" says Ulzheimer. If you're going for a mortgage and an error rears its wartlike head, a loan officer with access to rapid rescoring can have it resolved in 24 to 72 hours. "You have to be able to prove that it is indeed an error," says Weston. "It cannot fix truly negative information."
7
Finally, enjoy the benefits.
When you achieve a great score, go into all negotiations with confidence, say our experts. "If you have a score above 780, you don't want to be hearing things like, 'Well. . . in the past you'd get a great rate. . . but I have to give you this higher rate because credit isn't what it used to be, yada yada,'" says Ulzheimer. "They should be rolling out the red carpet wherever you walk." For more business success stories, check out the 5 Proven Ways to Fund Your Dream Business.
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