One of my 2008 financial goals is to have at least a 720 credit score with the 3 major credit bureaus. In checking my credit scores today, I am two-thirds of the way to my goal.
Equifax Score History:
- 694 on 11/14/2007
- 709 on 11/27/07
- 765 on 1/12/2008
- I'm pretty happy with this score as most creditors in my area pull Equifax.
- 707 on 11/14/2007
- 701 on 11/27/2007
- 728 on 1/12/2008
- 706 on 11/14/2007
- 706 on 11/27/2007
- 712 on 1/12/2008
- Not sure what the deal with Experian is. My score hardly ever changes and has been the slowest one to increase.
What have I done to increase my credit scores?
- Paid all my bills on time. This is 35% of your credit score. Having a late payment reported can send your credit score into a downward spiral. A late payment can stay on your report for up to 7 years.
- Having a good mix of credit. This is 10% of your credit score. Having a good mix of installment loans, credit cards and mortgages is good for your credit score. This is really important if you have a short credit history. Obviously, you should not apply for new credit just to have different types of credit if you don't need it. This will actually hurt your credit in the short term.
- Having a low amount of debt in relation to available credit. This is 30% of your credit score. The closer you are to maxing out your amount of available credit, the more negative the impact to your credit score. Paying off the remainder of my credit card debt definitely helped to improve my score.
- Length of credit history. This is 15% of your credit score and is something that simply improves with age. The oldest credit line on my credit report is over 12 years old.
- New Credit. This is 10% of your credit score. Every time you apply for new credit, the lender checks your credit score. This causes an "inquiry" on your credit report and can decrease your score 2-3 points. Multiple inquires in a short amount of time can also send your credit score into a downward spiral. Shopping for a mortgage or car loan is considered as one inquiry if done within a 30 day time period. I've only applied for credit one time in the past six months and that was when I applied for the Discover Business Card.
Using the above tips, you should see a significant increase in your credit score within 6-12 months. If you plan to make a major purchase within the next few months, start now to make sure you have the highest score you can. Having a higher score and improve your chances of loan approval and can reduce the interest rate on your loan and save you money in the long run.