How to Increase a Credit Score

Video Transcript

"One question that often arises is, how do I increase my credit score? Well there's many different factors to your credit score, and so there's many different methods that you can use to increase the score you currently have. One method is to always pay your payments on time, that will give you a higher credit rating without doubt. But there are other things that you need to consider as well. If you have a credit card that has a certain amount of limit to it, you want to make sure that you keep the amount that you owe on that credit card to no more than 30 percent to 40 percent of that limit, in other words if you have a 10 thousand dollar limit, you want to make sure that you do not keep a balance of no more than 3 to 4 thousand dollars on that card, that will show that you are not only making payments on time, but you are capable and have shown that when entrusted with large amounts of available debt, that you do not over extend yourself. In addition, you can also do a few other things, not only keeping your payments current, keeping it at reasonable debt, but also looking at attaining credit cards that you use infrequently, in other words you don't keep a balance running on them, these may be store credit cards, these may be additional major credit cards that you consistently pay off every single month. Now, rather than close the accounts to credit cards that you no longer use, you want to keep those open, the reason being, again, it shows that you have available debt, but you're using it responsibly, and that you are not having to use that debt to contain you on borrowing. And one very important final piece about increasing your credit score, is you need to find out what's on your credit bureau reports, you are eligible to receive once every year a credit bureau report from each of the three credit bureau reporting agencies. Simply go to, www.annualcreditreport.com, and request your copy from each of those three reporting agencies, look at that report and distinguish what good history verses what bad history may be on that report. Any items that you have on that report that reflect bad history on your payments, then you would want to either contact the creditor to make sure that is fixed on their end, or contact the credit bureau reporting service and make sure it's fixed on their end. You'll want to address anything that isn't excellent credit on that credit report."