The most important number in our life may not be the age. It is the credit score. Nowadays, few of us can live without credit scores. Banks, lenders, landlords……people in our lives, would like to check your credit scores and then make their decisions.

For those who have high credit scores, keep it. How about those with low credit scores? Is there any way to improve?

YES, there is.

Don’t worry, you still have a second chance to increase your credit score.

  • Always pay your bill on time

It counts 35% of FICO, which also directly shows whether you are a reliable borrower. One delay or missing payment can lead to a decrease to your credit score. You can set an auto pay to avoid late payments.

  • Lower your credit utilization

Credit utilization shows your total available credit that is being used. The lower your credit utilization, the higher your credit score.

For example, if Jack has two credit cards. Credit line of card A is $2500, his balance is $800; credit line of card B is $1000, and his balance is $500. The total revolving credit is $2500 + $1000 = $3500. The total credit used is $800 + $500 = $1300. Therefore, the credit utilization ratio is $1300 divided by $3500, or 37.1%.

Transferring balances from one card to another doesn’t really change a thing. Because the credit utilization looks at the total amount of outstanding balances.

Obviously, there are two ways to lower the credit utilization: reduce the outstanding balance and increase credit line. Reducing outstanding balance requires you pay bills on time. But how to increase credit line? You can call the bank or the company that issue your credit card. Generally, you are granted an increase if your account is in good standing.

Also, you can open a new credit card. Pay attention, don’t open too many cards rapidly in a short period of time, otherwise, you’ll be considered a high risk by FICO.

  • Don’t close a credit card account

If you are no longer using a credit card, closing it may hurt your credit score. Your total available credit is reduced by closing a credit card. If you continue to carry the same balance as before, your credit utilization would increase, which could lower your credit score.

What’s more, closing a credit card with a long history could negatively affect your credit score, since the length of credit history is also an important factor.

Last Words

Credit score is our lifelong friend. You have years to change and improve via every payment. As regards to the calculation of credit scores, FICO focuses on the past behavior, while other systems focus on the prediction of future behavior, such as job stability. But no matter how calculation changes, the core remains that, you should be a trustworthy borrower.

A high credit score really helps. How about start form now, trying to be a reliable borrower?

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