SAN ANTONIO — Your credit score is not just a number. It is one of the most important numbers you have. It ranges from 300 to 850. The magic number to get lower interest rates and more credit approvals is 800.
“If you have a credit score of 800 or higher, it’s going to save you money,” said Matt Schulz, the chief credit analyst at LendingTree.com. “It saves you money in the form of lower interest rates on mortgages, credit cards, car loans. You may face fewer fees. It really does make a difference what your credit score is as to the terms that you get for things that you apply for and it’s going to save you a bunch of money.”
Here is how you get there: First, pay bills promptly.
“The number one tip is to pay your bills on time, every time. That’s really going to be critical to maintaining an excellent credit score because even on 30-day late payment could trim 100 points off an otherwise really strong score,” said Ted Rossman, a senior industry analyst at CreditCards.com
Next, use only a portion of your available credit. It is called your credit utilization rate, which is how much you owe divided by your total credit limit.
“If you’re somebody who has a bunch of cards and a bunch of maxed out cards, then banks are going to be nervous about lending you more money because they have seen that you may not pay those cards off quite as quickly,” said Schulz.
That means using less than 10 percent of your total credit limit.
Do not open more credit cards.
“You’ll likely end up with the highest credit scores when you haven’t applied for any new credit in the past year,” said Nathan Grant, a senior credit analyst with CreditCardInsider.com
Instead, the trick to increasing your credit limit is making this call:
“Ask for a higher credit limit from your card issuer,” Schulz said. “If you can’t change the number on the balance portion of the equation for your utilization rate, at least you can change the number on the available credit portion of that equation.”
Plus, fill out your report with positive, non-credit card payments by using Experian Boost, for free.
“It’s going to pull in nontraditional things like your rent to your streaming services, your cell phone payments, your utilities,” Rossman said. “You can really bolster your report by getting those things in there.”
You do not even need to get to 800 to have great credit.
“Once you get to 760, 780 you’re already going to get approved for most loans,” Schulz said. “You’re already going to get the best terms for a lot of things. It’s important to understand that you’re not going to get to 800 tomorrow if you’re just getting started with credit or if you’ve made some mistakes. Good credit and great credit is a marathon. It’s not a sprint.”
A long account history will also help increase your score.
“That’s a little bit easier said than done,” Rossman said. “You can’t just magically get older, although one tip there is you can get yourself added as an authorized user on somebody else’s credit card. So a young person could jump start their credit history by getting on a parent’s credit card.”
Make sure the authorized user has good credit.
“The whole goal of this is to help improve your credit score even more,” Grant said. “You just want to make sure that that account is now being used extra responsibly, doubly so with another user.”
You can also try to reduce you interest rate.
“One of the best ways to do that is by getting a zero percent interest balance transfer credit card that allows you to go a year, 15 months, 18 months without paying any interest on the transferred balance,” Schulz said.
You can also try calling your credit card issuer and asking for a lower interest rate.
“It sounds crazy and you probably don’t realize how good your odds are of getting that reduction,” Schulz said. “LendingTree data has shown that about 80 percent of people who ask for a lower interest rate have gotten one and the average reduction was about 10 percent points. It’s really significant and can save you a lot of money. It’s totally worth your time to pick up the phone and make that call because interest is just such a killer when you credit card debt.”
The key to raising your credit score is to take some steps to improve it.
“I’ve been there,” Schulz said. "I had $10,000 in credit card debt in my 20’s and it consumed my life for several years. The most important thing that you can do is to begin to take some sort of action. Even something small. The last thing you want to do is nothing because that is when things snowball.”
Getting to 800 can take years, but you will see your credit score begin to grow within six months of taking these steps.
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