5 Rules That Will Keep Help Increase Your Score High

If you are between the ages of 22-32 years old, you may have already found that getting high point loans is not very easy. It is not because you have a bad credit record, but because you have no credit or too little (length of time using credit) of a credit history. Do not panic. There are ways to boost your credit score in record time. Here are 5 steps that can help you achieve your goal.

1.    Save efficiently– Young people often feel that saving for retirement is a middle age obligation and they have plenty of time until they are forced to think about it. Wrong. You need to start saving for your retirement as early as you can; in your 20’s is the best time to start. The earlier you start your savings, the more you will have saved with  less financial sacrifice now. Savings also look good toward your overall credit score.

2.    Emergency fund is a must– Do not count on your parents/ friends every time you are in a financial jam. Establish a solid emergency fund. You will be greatly relieved when you know you have a safety net ready for times of financial crisis. The reality is that if your only plan is to be rescued by others you will find yourself in greater peril. Establishing your own financial plan for emergencies will help you stay on track with expenses even if you do not have a job – and that is what will keep your score high.

3.    Keep close track of your credit report– There are three credit score bureaus: Equifax, Experian and TransUnion. You can get one report per year from each on these agencies at AnnualCreditReport.com. While Equifax and TransUnion follow the traditional FICCO score, Experian uses the VantageScore which is a relatively new model. Get one report every three to four months and you will have a clearer picture of your financial outlook. Check carefully and contest any error you find on your report. A clean report goes a long way to building a high credit score.

4.    Pay bills on time every time– FICCO score attributes 35% to paying bills on time and VantagePoint attributes 32%. Pay attention to your bills, for this is a crucial part of your credit score. To ensure that you NEVER forget a payment, sign up with your lender’s for payment alerts that are either messaged to your mobile phone or emailed to your account. You can also sign up for automatic debit of bills from your bank account. When using such options, ensure that you check what bills have been paid and the details of these bills so if you are a victim of identity theft you will be aware of it immediately and can take proactive measures to minimize the damage done to your financial life. Many victims of identity theft are not even aware they are victims until there is massive damage done to their finances.

5.    Use credit miserly– The credit to credit utilization ratio is the next big scorer on your credit report. This is why you should aim at using about 7-10% of your total credit to keep your score maximized. Do not close credit card accounts just because you do not use them. The credit cards add to your total credit, which in turn allows you a higher amount for credit utilization.  For example, if you have four cards with $1000 credit limit and you use $1000 your ratio is 25%. Close two cards and your ratio shoots up to 50%.

Now that you know these credit guidelines, apply them to your day-to-day living and watch your credit score increase over time. Aim for a score above 700 if you are looking to buy a home or making any large purchases through banks.

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