Uncommon And Surprising Tips to Help Raise Your Credit Score

Besides the top 15 ways to improve your credit score, there are a number of other useful tips you can follow to raise this measure of personal financial health. Some of these are simple things that you might not consider otherwise.

Check if You Are Linked to Another Person

Sometimes another individual’s credit gets tied to your own by mistake. This is easy to correct by filing disputes with the credit reporting bureaus. It can have a massive impact on your score if this individual’s credit is poor. 

Use Your Secured Credit Card Sparingly at First

You want to keep your credit utilization category low. This gives you more points in this second most important category. The credit card company is also more likely to raise your limit or refund your deposit when they see this type of responsible financial behaviour. 

Check for Fraudulent Activity and Fix It

Fraud affected 46 percent of Americans over the past five years, according to electronic payment systems firm ACI Worldwide. If you spot fraudulent activity on your credit report, you need to address this immediately before it becomes more damaging.

Requesting a credit freeze is the fastest way to stop the problem from getting any worse. Then you can set about disputing the fraudulent activity.

Move Less Often

Taking on new mortgages continuously can affect you negatively in several ways. You never pay down your mortgage loan. Your credit history average is shortened with each new mortgage as well. By staying in your home and paying your mortgage on time every month, you show the stability and financial responsibility that the credit scoring models love. 

Leave Accounts Open

It can be tempting to close credit cards that you do not use, but this harms you in two categories. Your credit utilization will rise if you lose available credit. This is the second most important category comprising 30 percent of your score.

Also closing accounts lowers your average account credit history, a component that makes up 15 percent of your score. Keep these accounts open, charge small amounts from time to time, and then pay them off every month to improve your score.

Take an Auto Loan and a Mortgage

The credit mix category amounts to 10 percent of your score. Creditors like to see different kinds of credit that you are keeping up with on your reports. Two categories they especially like are mortgages and car loans. Having these will give you a number of points in this category and also a stronger payment history category (the most important component). 

Pay Your Rent on Time Every Month

You can ask your property management company to report your monthly rent payments to the credit bureaus. This will improve your payment history category that is the most important component. If your landlord does not offer this service, try signing up for an electronic rent payment service which will guarantee reporting to all three major credit bureaus. Some of the big names in this industry are Rent Track, Pay Lease, eRent Payment, Pay Your Rent, and Clear Now.

Pay Your Cell Phone and Utility Bills on Time

Most utilities and cell phone providers will report your payment history to the credit bureaus. This is a good way to build up new credit or rebuild damaged credit. It counts towards the most important component of payment history. 

Get a Personal or Secured Loan

Another way to improve your credit mix category (10 percent of your score) is by taking out either a personal or secured loan. This will give you another form of credit to show on your report. It could add several key points to your FICO or Vantage Scoring scores. 

Become an Authorized User

For individuals just starting out with credit, this is a great way for you to establish a payment history. Your parents or a trusted friend can make you an authorized user on one of their credit cards. With each timely payment, you will benefit in the key category of rent payment history. It will also give you a credit utilization component, the second most important category. 

Get Credit for the Bills You Pay

Make sure that all bills you pay are reporting to one or more of the credit reporting bureaus. You can ask companies to do this if they are not already. Timely rent payment is a very good one to have on your report.

Obtain Store Credit Cards or Student Credit Cards

Another great way to improve your credit mix component (10 percent of credit scores) is by obtaining store credit. For people who are newly establishing a credit profile, getting a store credit card or student credit card are two of the easier ways to get those all important first accounts approved and open.

Register on the Electoral Roll

This adds another source for your address and contact details to your credit report. Odd as it may seem, it does increase your credit score too, according to Experian.

15 Factors That Positively Impacts Your Credit Score

1. Choose a Secured Credit Card and Pay it Off Frequently

Secured credit cards are great tools to help you build up (or rebuild) credit with the three credit reporting agencies Experian, Equifax, and TransUnion. By making a deposit of typically $250-$500, you gain a credit line of the same amount (or sometimes higher). 

You should use the card for purchases then pay it off as often as possible. This will establish good timely paying history, which gives you points in that most important category of payment history (counting for 35 percent of your credit score). 

Remember to keep your credit utilization on the card to less than 30 percent (for the credit utilization component of 30 percent of your credit score)

2. Get More Credit

If you do this judiciously, it can positively impact your credit score. The reason is because more available credit can translate to a lower total credit utilization amount (30 percent of your credit score). The key with this is not to apply for too much credit all at once, as this creates hard inquiries on your credit reports (too many negatively impact your new credit component of 10 percent). 

Try to get different kinds of credit since this impresses the credit bureaus. Store accounts, credit cards, auto loans, and mortgages all contribute to the credit mix category (counting for 10 percent of your score).

3. Raise Your Credit Limits

The more available credit you have, the better you look to the credit scoring algorithms. Your ultimate goal is to keep your credit utilization down to less than 30 percent. This is easier to do when you have $2,000 in total available credit rather than only $1,000. Higher credit limits that you do not overuse show the reporting bureaus that you are more capable of successfully managing debt and credit. 

The credit utilization category is the second most important with FICO and a close third for Vantage Scoring models. 

4. Charge Small Amounts to an Inactive Credit Card

If you allow months or perhaps even years to lapse between charges on an inactive credit card, the issuer will likely close it. This would hurt you in two ways. It would reduce your total available credit, increasing your total credit utilization (the 30 percent component). 

If you have $2,000 charged on $6,000 in available credit, this is 33 percent utilization. Should one of your creditors close a $1,500 card that you do not use then your utilization increases to $2,000 over $4,500, a far higher utilization rate of 44 percent. 

Lower is always better with this utilization number. The 33 percent utilization is almost at the maximum level the scoring models want to see, while 44 percent is definitely considered high and is penalized.

Having an inactive account closed would also lower your credit accounts average age (the credit history component counts for 15 percent). Avoiding this danger is easy. Take any inactive credit cards out when you shop to make at least small routine charges to them. This will keep your creditor happy and improve your credit score.

5. Pay Off High-Interest Credit Accounts First

If you are carrying balances on your credit cards, there is a definite strategy to smartly paying them down. You should always attack the highest interest rate balances first. Higher interest charges are increasing the total debt you have each month, damaging your credit utilization component. 

Paying these down first will reduce the amount of time it takes to get your debt erased and under control. 

6. Get a Credit Builder Loan

One of the easier ways to improve your credit score is by varying your credit mix. You can get more points in this component that counts for 10 percent by applying for a credit building loan. Be sure you make all of your loan payments on time, and this will also help out your most important component of timely payment history (35 percent of credit score).

7. Pay Off A Debt

By eliminating one of your debts, you successfully reduce your credit utilization component that counts for 30 percent of your score. This also raises your available credit, a component that Vantage Scoring model considers. It will give you additional points in your most important payment history component as well. 

8. Remove Recent Late Payments

Creditor bureaus are not required to remove late payments unless they are reported mistakenly in error. You can always approach your creditor and ask them to take off a late payment from your credit report though. You can do this over the phone or in writing. 

If the creditor removes the late information, then it will disappear from your credit reports. 

Be sure to provide any good explanations for why you were late. It might be that you suffered a financial hardship like going to the hospital or a natural disaster. The late payment might not have been your fault (and you have documentation to prove the bank error or other cause). 

If you always pay your bills in a timely fashion, explain to them that it was an inadvertent, one time mistake. 

When you have something to offer the creditor in return for helping you out, this may increase their willingness. You can offer to pay down (or off) a loan in exchange. You lose a number of points for a late payment in the payment history component, so anything you can do to get this removed can help you significantly.

9. Remove a Collection Account

Collection accounts equate to charge offs. These cause serious damage to your credit score. You can contact the original creditor and offer to pay them the full balance in exchange for them retracting it from collections. They may be willing to accommodate you to have the debt paid off. At the very least, they will have to report your debt as paid in full when you cover it. 

10. Pay Off a Past Due Balance

Past due balances negatively impact your credit score in the most crucial payment history category (35 percent). The longer they are negative for, the worse they harm your score. The balance will show as current once you bring the account up to date. Paying it off will help your score to improve even more. 

If a past due balance is only an isolated event, FICO will not penalize you for it under their newest algorithm versions FICO 8 and FICO 9.

11. Pay More Than One Time in a Billing Cycle

Paying more frequently (than once in a billing cycle) will help to keep your credit utilization amount down. The reason is that your statement balance is the one reported to the credit bureaus. By reducing this number, you can effectively lower your credit utilization. 

Remember that your goal is to keep this number to less than 30 percent and ideally under 10 percent (for 30 percent of your credit score component). 

Making extra payments will also help you to pay off any balance you are carrying sooner and reduce significantly the amount of finance charges you are assessed. 

12. Dispute Any Credit Report Errors

Credit report errors are a fact of life. They can have an impact on your credit score needlessly. The answer is to frequently check your own credit reports for accuracy. If you see mistakes, go online to the credit reporting bureau website right away and file a dispute. It can take the bureaus up to a month to investigate and correct these errors, so do not put it off.  The websites for this are:

13. Pay Down Revolving Balances to Less than 30 Percent

The credit scoring models are heavily concerned with how much of your available credit you utilize (counting for 30 percent). They want to see less than 30 percent used. If you have $5,000 in available credit, then this means keeping a balance of under $1,500 at the end of each month. You can pay down one or more of your balances even before the statement is issued to accomplish this. 

Ideally you should try to keep this credit utilization number to even less than 10 percent for maximum points in the category. 

14. Use an Eligibility Checker

When you are considering applying for new credit, you want to be careful to avoid too many hard inquiries on your credit reports. This is a component of your score that counts for 10 percent. The way to shop around without harming your credit score is to utilize an eligibility checker before applying. This way you will be able to reduce the number of creditors to whom you apply for credit. 

Tools like the eligibility calculator at Money Savings Expert will even give you a percentage chance of being approved for the cards you query about without needing to have any hard inquiries on your reports. They also help you to choose the cards that are best for your personal circumstances to narrow down the crowded credit card field.

15. Use a Co-Signer

If you are new to a credit history or trying to rebuild a damaged one, a simple way to get better loan and credit card approvals is by utilizing a co-signer. A family member or friend can help you with this if they have strong credit. You receive the benefit of having the loan or credit on your credit report by “borrowing” from their good credit. It will also help you to benefit from more advantageous terms and lower interest rates on the loan or credit. 

What Influences My Credit Score the Most?

It is helpful to consider the ones that influence it the most so you can target these and improve your personal score. Inquiries are an area that you can easily address. Whenever you apply for credit or a loan, the creditor or lender will do what is called a hard inquiry on your credit report. While one or two of these will not have major impact, a number of them at a time can cost you points in the new credit category. 

Checking your own credit through a consumer service like Credit Karma or by requesting your full credit reports does not harm your score.

Bankruptcy

Bankruptcy dramatically impacts your credit score, and it can be more damaging than any other single factor. The two types of personal bankruptcy are Chapter 7 and Chapter 13. The primary difference is that a successful Chapter 7 will discharge your debts, while Chapter 13 involves a repayment schedule of from three to five years. 

In both cases, bankruptcy commonly does not fall off of your credit report for seven years after it is completed (though it can remain for up to 10 years). This makes Chapter 13 bankruptcy longer lasting and more damaging as your discharge is delayed by years. 

FICO scores penalize people filing for bankruptcy with stronger credit more severely than those with only average credit. 

Income

Income does not show up on your credit report, so it does not directly impact your credit score. If you apply for credit or loans, the lender will ask your income and use this to figure up your debt to income ratio. 

Your debt to income ratio should ideally be less than 30 percent. 

This is also the percent you should keep as a maximum with your credit usage every month. Higher numbers will cost you in the credit utilization component of your FICO score. 

Car Leasing

Leasing a car will usually not impact your credit score any differently than financing a car in an auto loan. If you make the payments on time every month, it will build or rebuild your credit as the payments get reported to the three credit bureaus.

Paying off a lease early can damage your credit, as the account gets reported as closed to the credit bureaus, something that they misinterpret as having settled a debt for less than you owed on it (even though you will pay more in penalties to close it out early).

Refinancing

Refinancing is another area of which you should be wary. If you pursue cash out refinance, this can have two negative effects on your credit score. First, you are replacing an older loan with a new loan, hurting your average age of credit history FICO component. Secondly, if it is a larger loan, then this will negatively raise your credit utilization ratio. 

Because this utilization ratio comprises 30 percent of your FICO credit score, you should be careful about increasing it through a refinancing. With any refinancing, be careful not to do it too often (which looks like you do not honor your contracts) or to shop around for rates much (which causes multiple hard hits on your credit at once and can cost you points).

Tax Liens

Some good news for you who owe the IRS money is that tax liens no longer show up on your credit reports. Experian reports that this decision was made in 2017, and all tax liens were removed from the three credit reporting bureaus by April of 2018. The result is that tax liens do not any longer have an impact on your credit scores.

How Exactly Is My Vantage Credit Score Calculated?

Vantage Score is using similar criteria to weigh your credit worthiness as does FICO. The primary differences are the weighting that they place on the different components and the fact that they pull data from all three credit reporting bureaus in determining your score. We look at their six scoring components next. 

1. Payment History – Highest Weighting

The top forecaster of risk for you with Vantage Score is your payment history. Their model assigns a 40 percent weighting to this, making it twice as important as their next most important category, or as important as the second and third categories combined. 

Late payments must be avoided at all costs. These can stay on your credit report for as long as seven years. 

2. Age/Type of Credit – Extreme Weighting

This category is the combination of credit history length and your kinds of credit. If you are able to make on time payments on a five year auto loan while you are paying 30 year mortgage payments and monthly credit card bills, then Vantage Score considers you exceptional in this category. 

It counts for 21 percent, making it the second most important part of the algorithm. 

3. Credit Utilization – Extreme Weighting

To come up with this figure, you simply divide your total balances by your available credit. You should maintain this level at less than 30 percent. Ten percent is even better.

4. Total Balances – Medium Weighting

Vantage Score gives 11 percent weighting to your total debt category (whether it is current or delinquent). By lowering your total debt, you will achieve a higher score in this category. 

5. Recent Behavior – Low Weighting 

This category gets five percent. It looks into how many recently opened accounts you have as well as the quantities of hard inquiries. It is considered higher risk when you have a larger number of hard inquiries since you could be taking on significantly more debt. 

6. Available Credit – Extremely Low Weighting

This category counts for three percent. Available credit refers to the amount in credit that you have available for use at any given point. The more credit you have available, the more points they will assign you in this least important category.

Credit Karma is the biggest name using Vantage Score’s model these days. They offer a completely free service (giving you your credit report and a credit score) that is subscribed to by over a hundred million consumers. You can also get credit monitoring from them. 

Vantage Score is also on revised versions now. In 2017, they changed their model in the trended data. Now if you are making larger payments to pay down your debt, then you will get more points than an individual who only makes the minimum monthly payments and one who is gradually increasing credit card debt. 

Something else that sets Vantage Score apart from FICO and other credit scoring models is that they ignore collections if they are under $250. They also provide dispensation for people who have suffered from natural disasters. Vantage Score also gives a letter grade of A through F alongside their credit score so that consumers are better able to comprehend what their credit score signifies.

Several elements are not covered by your credit scores. One of these is if you have been turned down for credit. Another is your marital status. Your income does not show on your credit reports either. Since this information does not appear in your credit reports, it is not directly reflected in your credit scores. 

The FICO Scoring Algorithm

Irrespective of the FICO model a lender or credit utilizes, five factors generally impact the FICO classic score they use to come up with your credit score. These are payment history, credit utilization, credit history, credit types, and new credit. Some categories also have sub-categories within them. We will go through each of these components next. 

1. Payment History

Your payment history comprises 35 percent of your score, making it the most important single component in determining your credit score. By making your monthly payments in a timely fashion each month and not showing bad public records of lawsuits, foreclosure, or bankruptcy you will score well here. Late payments detract from your score. 

Your score is more heavily penalized the later your payment is (two months penalizes worse than one month).

2. Credit Utilization

The second most important category with FICO scores is your credit utilization, amounting to 30 percent of your total score. The key here is to stay as far away from using all of your credit limit, regardless of whether you will pay the full bill when it arrives. FICO wants to see you with 30 percent or less of your available credit used. 

This means that you should not spend over $150 each month on a $500 credit card limit. 

3. Credit History

The next most important factor is credit history for 15 percent of your total score. By this FICO means the amount of time you have possessed your credit cards. The greater amount of time you have had your first one and the longer your average credit account history, the higher your score in this category will be. 

4. Credit Types

Your credit mix amounts to 10 percent. FICO is interested in the different types of credit that you possess (including credit cards, mortgage, car loans, utilities, store accounts) and the way that you pay them on time. It will help you have a better score if you count a range of different loans and credit cards on your report. 

The key is not to over-apply for these accounts in a short time frame. Credit bureaus interpret this as a warning sign that you could be desperate to get more credit. 

5. New Credit

New credit is the final category with FICO, and it equates to 10 percent of their calculation. The more cards you apply for at once, the worse your score in this category will be. They see it as a possibility that you are attempting to juggle your debt using new credit cards, a definite negative. 

It is better for your score to spread out your applications as much as possible.