According to a study by JPMorgan Chase earlier this year, one-third of Americans are dissatisfied with their credit score. Furthermore, 28% aren't confident their current score can help them accomplish their financial goals. Whether they are happy with their credit performance or not, 66% of all Americans still wish to improve their standing in 2016. Given the average credit score in America stands at 695 out of a possible 850, it's easy to see there's room for improvement. To help with the process, we outlined four quick things anyone can do to help improve their FICO score, and get one step closer to better interest rates and loan approvals.
- Increase your credit limit. One of the chief factors credit bureaus look at when determining your credit worthiness is what's called "credit utilization". That is the percentage of your total revolving credit line you actually use. You generally want this to be below 30%, in order to increase your credit score. One way to achieve this is by lowering one's spending. However, since altering one's spending habits is difficult, the other option is to increase one's credit limit - so long as you don't increase your spending, your overall utilization will go down as a result.
To do this, simply call up your bank and make a request. Be ready to have a number in mind as to what you would like your limit increased to. Also, have a good reason ready for increasing your limit. If you've recently started making more money, or paying less for your mortgage or rent, tell the representative over the phone about your new increased funds.
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The only way to catch mistakes on the report is by actively monitoring it. Every year, you can request a free copy of your credit report from each of the three credit bureaus - Experian, TransUnion, and Equifax. To get your free copy, you can go to the government-operated site AnnualFreeCreditReport.com.
Before committing to becoming an authorized user, check whether or not the card's issuer reports these accounts to the credit bureaus. Some smaller regional banks will only do this if the authorized user is the main accountholder's spouse.
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If this is your first ever credit account, and you don't have a credit report, it may take some time for this to actually take effect. According to Ethan Dornhelm, principal scientist at FICO, it can take up to six months after your credit report is created for a FICO score to be issued.
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