Learn how to pay off debt and invest in index funds
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How to Increase Your Credit Score
1. Make payments on time
2. Stay Under 33% Credit Utilization
2. Stay Under 33% Credit Utilization
Making your payments on time is a significant portion of your credit score - up to around 30% of the score.
2. Stay Under 33% Credit Utilization
2. Stay Under 33% Credit Utilization
2. Stay Under 33% Credit Utilization
What does this mean?
If you have 3 credit cards, each with a $10K credit line, you have a total credit line of $30K.
Never let your balances exceed $10K in total (or 33% of your total credit line).
3. Keep Older Accounts Open
2. Stay Under 33% Credit Utilization
4. Avoid Bankruptcy, Foreclosure, and Collections
Older accounts which have been well-managed help your score.
Older accounts imply you have experience making payments, and if those accounts have been managed well (paid on-time), this is a good sign.
I only have one open account, an old credit card. My credit score is great.
4. Avoid Bankruptcy, Foreclosure, and Collections
4. Avoid Bankruptcy, Foreclosure, and Collections
4. Avoid Bankruptcy, Foreclosure, and Collections
All three of these have a powerfully negative impact on your credit score.
If you can avoid these, do it. They will stick around for years tormenting your score.
5. Limit the Number of Inquiries
4. Avoid Bankruptcy, Foreclosure, and Collections
5. Limit the Number of Inquiries
Every time a lender pulls your credit on a loan application, an inquiry is added to your credit report.
If you have more than two inquiries, it's a sign you are either taking on a lot of debt or you can't get approved with other lenders.
Inquiries only stay on your report for a few months.