Seven Credit Score Hacks to Increase Your Rating

Your credit score can influence everything from the type of car you’ll drive to the house you’ll live in, and maybe even the job you get. Because this number controls so many factors in your life, it is important to maintain a high score. But what if your credit score is already low? While there are no shortcuts to improve your rating immediately, there are a few credit score hacks you may not be aware of that can help get you back on track.

1. Check for errors.

An error on your report could be negatively affecting you without your knowledge. You are entitled to a free credit report from each of the three credit reporting agencies annually. Make sure to obtain and check your report each year so you can dispute any errors, should they arise. There is a long standing myth that pulling your own credit report can negatively affect your score. The truth is, you can order your report as many times as you like and it will not hurt your credit history or have any effect on lending decisions.

2. Set-up automatic payments.

Because it can be difficult to keep track of what bills are due when, set up automatic payments on recurring bills. That way, you can be confident payments will always be made on time. Consecutive late payments could eventually lower your credit score over time.

3. Secure a credit card to use for necessities and pay it off bi-monthly.

If you don’t already have one, it might be useful to get a credit card for certain necessities like gas and groceries. Just remember not to charge more than you can afford to pay off at the end of every month! An approach worth considering is paying off your balance bi-monthly, or every time you get paid. Finally, securing a credit card with a high limit can help keep your credit utilization rate down, but don’t max it out.  

4. Lower your credit utilization.

Credit utilization is determined by dividing your credit card limit by the balance on the card. Credit utilization is important because it makes up 30 percent of your FICO credit score. For example, if you have a card with a $1,500 balance and a limit of $2,000, then your credit utilization for that card would be 75 percent. If you have a card that has a $1,000 balance, but a $10,000 limit, your utilization is only 10 percent. Most experts recommend keeping your utilization rate at 30 percent or below. Having a maxed out card or a high utilization rate can signal to lenders that your debt situation is unmanageable.

5. Set up payment plans with creditors.

If you have delinquent debt, set up a payment plan with the creditor before the debt is sent for collection. Ask for the terms in writing to make sure your debt will not be sent to a collections agency if you honor the terms of the plan.

6. Check old debt on your credit report.

Negative items on your credit report have a statute of limitations. It is against the law for bad debt to remain on your credit report after seven years. If you see infractions on your report older than that, contact the credit report agency to get them removed.

7. Stay on top of changes.

Your credit score will go through changes over time, so it is important to be aware of when and how it is changing. First Command Bank now offers a free credit score and monitoring service for bank clients. This new dashboard feature gives you instant access to your score every time you log in to your online account. It also offers resources to help you improve your rating. If you have negative items listed on your report, our credit monitoring service will show you what those items are and recommend specific actions you can take to improve those areas. That way you can easily stay on top of your score and work on increasing it over time.

For further advice on debt and credit score management, speak with a First Command Financial Advisor near you.