In 2015, my credit score was as low as 402. I knew the importance of credit score, but I had no idea what the score was nor how to check it until I received calls from multiple debt collectors. The unfortunate part about the whole situation was someone else used my info to open credit card accounts without my knowledge. Upon knowing, my credit was as low as 402. Some may ask how I raised my credit score below are the steps I took to raise my credit score from 402 to 803.
To know your credit history, you must check your credit report periodically at the annual credit report website. It is the only source for your free credit report as authorized by federal law. After reviewing my credit report, I noticed several accounts opened under my name. I called all three of the credit bureaus to dispute charges and file for fraudulent activities on my account. They were able to delete some of the charges from my account, and I had to file a police report to take care of the remainder. Because I knew the individual, I didn’t want to press charges.
I did the following to raise my credit score from 402 to 803.
PAID BILLS ON TIME
Payment history is among one of the most important determinants of your credit score. I gathered all the delinquent accounts and set up payment plans. With the help of the person who opened the account without my knowledge, we were able to pay most of the balance. I set a goal to throw any extra cash at the balance to get rid of the debt faster.
LOW UTILIZATION
Since payment history, together with credit utilization, account for about 70% of your credit score, I stopped using my credit cards for a long time. Lenders are more likely to lend to people with a credit utilization ratio of 30% or lower. As I continued to pay off the debt, I stopped using my card to decrease my utilization ratio.
DID NOT APPLY FOR A NEW ACCOUNT
I had so many accounts opened under my name that there was no need to open a new one. Every time an individual opens a new credit card account, it results in a hard inquiry on your credit report. When you have multiple hard inquiries, your credit score can be negatively affected temporarily. Hard inquiries remain on your credit history for two years.
AVOIDED CLOSING UNUSED CREDIT CARD ACCOUNT
In 2015, my oldest credit card account was three years old. I kept my unused account open because closing an account increases the credit utilization ratio.
By following the above steps, I was able to raise my credit score from 402 to 803 over time. There is no quick fix to improve your credit score, nor a company that can help you fix it quickly. Time is your biggest ally in improving your score. The length of time it takes to improve your score depends on the type of negative factors affecting your score. The negative factor may continue to affect your credit score until it reaches a certain age.
Start improving your credit score by often checking your FICO score. There are no shortcuts. Pay your bills on time, spend lower than 30% of your available credit, and avoid opening new accounts too often. One of the main things I continue to do to improve my credit score is paying off my entire balance each time I use it. I am able to do this because I use my credit card to purchase items I can afford to pay in cash while building up points and rewards. If you are struggling with credit card debt, read the post below.
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Till next time,
Charly
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