It is often said that a good name is better than riches. However, in the land of the free and home of the brave, a good name with the three major credit reference bureaus an excellent way to riches.
What’s a Credit Score?
If you’ve read some of the articles we have on credit score, chances are that by now you’ve figured out that your credit score is a three-digit number generated using information found in your credit report.
The credit scoring method is a logical system that uses tangible data about your credit history to determine your creditworthiness. It awards points according to how well you perform on factors that help to predict how likely you are to repay a debt.
Credit scores typically range between 300 and 850 and the higher your score is the more credible you are, and the more eligible you are for better credit terms, rent terms, and in some cases, better chances at landing some jobs.
According to a report carried out by CNBC, the average credit score in the United States is currently at an all-time high of 704 and this is considered awesome. You may be wondering why we are talking about how to get my credit score to 750?
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Why you Need an Excellent Credit Score?
Lenders have categorized credit scores into different groups to indicate how risky it would be to extend credit to an individual. They also use the credit score to determine other parameters of lending such as the APR or level and value of collateral needed where applicable. Generally speaking, individuals with higher credit scores are deemed more likely to pay and consequently get better lending terms.
Lenders typically categorize credit scores in the following groups:
- Higher than 730: Excellent.
- Between 650- 729: Average.
- Between 620-649: Poor.
- Lower than 620: Bad.
Getting a 750 credit score is like attaining excellent health. It takes time, effort, discipline and sacrifice. But once you achieve it, the benefits are multiple. However, you have to continuously manage it responsibly and sustain it. A false move or a few bad moves could land you in the 620 range in no time.
If you are not sure on how to get a 750 credit score, below are seven tips that really work.
1. Dispute any Errors on Your Credit Report
You can give your credit score a shot in the arm first by challenging the contents of your credit report.
There are still far too few Americans who check their credit reports. However, some do and have challenged the information they see. According to the Consumer Financial Protection Bureau (CFPB), erroneous information on a credit report was the most prevalent complaint among consumers.
Moreover, a study by the Federal Trade Commission (FTC) indicated that 25 percent of the complaints identified errors on their credit reports that might affect their credit scores. A further four out of five who identified these complains had their credit scores adjusted.
Common errors include: clerical errors when reading or keying in your personal information from a hand-written application; loan or credit card payments applied to the wrong account; double (or multiple) reporting on one account which make it seems like you have higher debt; wrong narratives associated with closed accounts – for instance, if you closed an account but it is indicated “closed by grantor” – or wrong information due to identity thieves.
If your dispute is greater than you can handle, get in touch with Lexington Law, they’ll give you all the help you need.
2. Manage your Payment History
Being aware of the contents of your credit report and proactively managing it is an excellent move, but it uses secondary information. Therefore, complaining about the contents of a credit report would seldom cause a significant impact on your credit score.
The same report by the FTC indicates that about one in twenty complainants had their scores adjusted by 25 points and only one in 250 complainants had their score’s adjusted by 100 points.
A better way to make your credit score gallop towards 750 is to take charge of your payment history.
In fact, in models such as the FICO® Score payment history accounts for 35 percent of the credit score calculation, thus it has the highest impact on moving your score towards 750.
Although you may be grappling with past problems such as delinquent payments, collections, missed or late payments which negatively impact your score and don’t easily go away, once you set on the path to prudent repayment, they won’t haunt you forever.
If you have missed a payment, get current and ensure that you stay current. It is beneficial to set reminders to help you keep track of which bills are due when. You can do this through smartphone apps such as PersonalCapital. Alternatively, you can do the old-fashioned method of marking the due dates on a paper calendar.
3. Reduce the Total Outstanding Debt
Managing your payments is an excellent move, but if you have too many payments – with large balances – you’ll find it hard to move to the lucrative 750 club. You’ve got to reduce the total outstanding debt, especially credit card debt.
The total outstanding debt accounts for nearly 30 percent of your credit score and should be one of the fat ducks lined up to help you figure out how to get that coveted 750 credit score.
Moreover, reducing your overall debt will have a far more positive impact on you than just inching closer to a 750 score. However, it is often easier said than done. Here’s an article that has invaluable tips on reducing your debt even on a low income.
For you to have the highest impact on the credit score, start by making a list of all your accounts – from your credit report – and find out how much you owe each account and the applicable interest rate. Then stop using all your credit cards and come up with a repayment plan for the accounts that are not in good standing. Prioritize the most recent and highest interest cards.
4. Maintain Accounts that are in Good Standing
As you close accounts, don’t fall for the hype that having fewer accounts is a responsible move that demonstrates that you are taking steps towards better management of your debt.
All models used to calculate your credit score are based on measurable data and cannot pick out an intangible motivation.
A lender may notice a reduction in the number of accounts which they may interpret as a positive move. However, it may be detrimental to your quest for achieving a 750 credit score.
The age of your credit accounts contributes about 15 percent of your overall credit score. Meaning, the longer you have an open account that is in good standing, the better it is for you. Therefore, if you close several accounts indiscriminately, without considering whether they are in good standing or their age, you could end up reducing your score.
5. Avoid Opening New Accounts
To complement the above tip, you should avoid opening new accounts just for the sake of it. Open a credit card account only when it makes financial sense to do so.
The average American receives about 40 to 50 credit card offers in a year. Some will come with extremely lucrative offers that you would lose a good opportunity if you don’t buy in. However, some are just dumb offers.
Remember, with each open account, a hard inquiry on your credit score is made, which eats into your score. Once you open a new account, your credit utilization is expected to increase, not to mention the increased risk of default. Therefore, don’t just open a credit card account to get a 10 percent discount on a $ 29.99 attire.
6. Talk With your Creditors
It might be the last thought in your mind, but you’d be surprised to find out how your credit score can move in leaps and bounds if you have a chat with your creditors.
Ask about hardship programs, request for discounts on interest rates and where possible a rescheduling of your loan to help you manage repayment better. Do whatever it takes to iron out the outstanding accounts and accounts that you genuinely find hard to pay off.
7. Lastly, Check Your Credit Score Less Frequently but be Prudent on Your Credit Report
Avoid monitoring your credit score every week or less to see if there are changes. Keep in mind, time is an essential contributor to the overall credit score, therefore making frequent inquiries will probably drive you crazy.
Instead, check at least once every three months. Freescore360 gives you the perfect opportunity to check your score from the three leading national bureaus. If you’ve taken any of the above steps you’ll get a broader picture of how your moves have contributed to improving your overall credit score. Then you can re-strategize or build on what’s working.
Finally, ensure that you check your credit report at least once every year. It’s the ultimate strategy on how to get a 750 credit score. It will help you to identify which of the above tips is most relevant and would have the most impact on your score.