How to Get an A Plus Credit Score

Many Americans have bad credit but more people have received bad credit ratings due to the recession. Bad credit can prevent you from getting hired for a job, or getting approved for a loan or credit card. You may be provided explanations of why you have bad credit but still may not understand what it means. One of the major factors in understanding your credit report and your credit score are the reason codes listed on your report. Some reason codes that may appear on your credit report are:

• Length of credit history – how long you have had credit, either a loan or credit card.
• Too many inquiries – you have had more than 1 or 2 companies pull your credit report within the last 24 months which lowers your credit score. You should have no more than 1 inquiry every 12 months if needed.
• Too many new accounts – you are considered a risk because you opened more than 1-2 new accounts within the last 24 months which lowers your credit score.
• Account balances too high – your credit cards are maxed out or the balances on your credit cards are above 50% of the credit card limit.
• Number of revolving and installment accounts – you need to have a mix of revolving (credit cards, line of credit) and installment accounts (loans).
• Recent delinquency – you had one or more accounts that were paid late in the past 0-3 years.

Your credit score consists of 5 factors which determines if you have good or bad credit: your payment history (35%), the total amount of debt owed (30%), length of your credit history (15%), new credit (10%), and the types of credit used (10%). A credit score ranges from 300-850 with 850 being the highest score. Your credit score is viewed as an indication of your trustworthiness and your ability to pay your bills on time.

Common myths about your credit score: paying a late account automatically increases your credit score, ignoring older accounts means you no longer have to pay them, if an account that is 7 years old is removed from your credit report you don’t have to pay it, medical bills don’t have to be paid, only loans and credit cards are reported on your credit report, and if you pull your credit report yourself this lowers your credit score. Here are 8 ways to get an “A” plus credit score.

1. Order your credit report and credit score from the 3 major credit bureaus, Experian, Equifax and TransUnion online at annualcreditreport.com or by phone at 877-322-8228. If you find any errors on your credit report dispute the information online for a quicker turnaround time. Mail any supporting documentation.
2. Pay off collection accounts, judgments, and tax liens as soon as possible. Each account paid can increase your credit score by 20-25 points.
3. Prior to paying a delinquent debt ask the company to remove it from your credit report. It is easier to negotiate prior to sending in your payment.
4. If you have been 30 days or more late on a credit card bill get current. Getting current on your credit card bills can increase your credit score by 20-30 points.
5. If your credit card balance is 50% or more over the credit card limit send your payment so that it arrives 5 to 7 days before the due date. This will ensure the most recent balance is updated to the credit bureaus each month.
6. Negotiate. Ask creditors to settle an account for 50%-70% of the total amount owed. In exchange for payment ask the creditor to remove the account from your credit report and request a confirmation letter stating the account will be removed prior to making a payment. If the creditor refuses ask the creditor to report the account as “paid” or “paid in full” on your credit report.
7. Pay balances in full at the end of each month.
8. Call your credit card company and tell them you would like to increase your credit score and ask them for some tips.