Options to Improve Your Credit Report and Credit Score

Credit report and a pen

Keep in mind that there is no such thing as one credit score that is used by all creditors. The typical individual with a credit history may have hundreds of different credit scores across the three major credit bureaus—TransUnion, Experian, and Equifax—that are used for different purposes, such as car loans, credit cards, mortgages, or setting insurance rates. That being said, there are some common steps individuals can take to improve these various credit scores.

The number one action consumers can take to improve their credit score is to make on-time payments to creditors. When creditors choose to report to the three major credit bureaus, the credit report will show a record of on-time payments along with any 30, 60, or 90-day late payments. Late payments will stay on a credit report for up to 7 years and recent late payments especially will lower a credit score.

Another action to consider is to lower your credit utilization ratio. This means using less available credit on a credit card or paying down an existing loan. If an individual has a $1,000 credit limit on a credit card, for example, maintaining a balance of $250 or less is a frequent recommendation. To increase your credit score, some creditors further recommend using no more than 5% of your available limit on a credit card, or $50 in this example.

New options for increasing credit scores were also rolled out in 2019. Experian introduced their Experian Boost product that allows individuals to agree to give the credit bureau access to personal bank account information. This information is used to track bill payments that may not otherwise be reported to a credit bureau, such as rent payment or utility bill. On-time payments are reported using bank account information, but missed or late payments are not reported. This product could be helpful for individuals with a limited credit history and positive payment history, with more information found at Experian.com.

The UltraFICO Score is another new option that is being piloted through select financial institutions nationwide. The UltraFICO Score does not add information to a credit report, but does provide the option of adding additional points to a FICO score pulled by a creditor through the Experian credit bureau. The UltraFICO Score factors include the length of time financial accounts have been open, the history of positive account balances, frequency of back transactions, and evidence of cash on hand, such as a minimum $400 account balance for the previous three months. Participating financial services and more information is found at Fico.com.

Finally, did you know that people who check their credit reports have better credit than people who don’t? Make it easy to keep an eye on your credit by downloading calendar reminders three times a year (2/2, 6/6, 10/10) to get your free credit report.

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