Tag: Credit Score

Credit Scores Are Easy To Raise: Reach Excellent

Your credit score determines how trustworthy you are to the lenders eyes so maintaining a healthy score is very important.

Especially if you’re looking to make a big purchase like your first home.

Whether you’re looking to add points or reach an excellent score, here’s how to increase your credit score.


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#1. Be Active

You will need to be active if you want to increase your credit score.

If you’ve just graduated from high school chances are you have 0 credit score.

You’ll need to be active by opening up accounts under your name.

If you’ve had more experience economically but are debt free, you too will need to open accounts in order to increase your credit score.

Reaching an excellent credit score will require that you have quite a history of credit use and will also be earned by a number of factors.

Let’s start with the easiest form of building credit.

#2. Utilize A Credit Card

One of the easiest forms of building credit is to utilize a credit card.

If you’re fresh out of high school, it can be a great way to begin building your credit through small purchases from which you can pay back once your statement has been provided to you.

Do not take up a credit card unless you are working.

A credit card is not free cash.

A credit card is merely a tool for you to prove to lenders you are responsible enough to handle a credit line.

I’ve compiled a list of ways to use a credit card responsibly here.

If you’ve used a credit card in the past but have since then buried them or your credit card expired, you’re going to need to be active once again.

Use a credit card with a low credit line just so you may continue to show lenders a history of active credit use.

Here are a few great ways you can use a credit card in order to show history while staying out of credit card debt:


  • Use it at the gasoline station
  • Buy small groceries
  • Purchase a book from it
  • Treat yourself to lunch/dinner once a month

As you can tell from the list, these are all small ticket items you can pay back without any problem.

The key to using a credit card responsibly is to use it on things you can pay back then and there without using the credit card.

This trick will allow you to begin building your credit score from scratch and to increase it as well.

Here are the don’ts to using a credit card:


  • Don’t buy luxuries (tv, game consoles, phones, etc.)
  • In other words, don’t buy anything that will require you to make payments (stay away from creating that debt)
  • Do not use more than 30% of your initial credit line
  • Stay away from the quicksand (read more about it here)
  • Keep using debit for all your bills, never use your credit card for those

Let us know in the comments section below how you’re using your credit card. Have you been using it wisely or do you have credit card horror stories to share with our readers?

What happens if I stop using my credit card?

If you stop using your credit card it will automatically deactivate after 3 months of no use.

Your credit score won’t go down but by deactivating your credit card, your chances to raise your score become slimmer.

This is why it’s important to be active with your accounts.

#3. Use An Auto Loan to Increase Your Credit Score

At some point in life, you’re going to need your own transportation, especially if you’re in the states.

An auto loan is a great way to lock you in a term of non-stop credit achievement.

While staying out of debt will become a goal for you at some point, your first auto loan will also give your credit score a massive boost which will help increase it to excellent.

Auto loans show lenders commitment and responsibility.

Each month you pay your vehicle on time will essentially reflect on your credit score throughout the years of your term.

You do not necessarily have to finance a new car.

Start with a used and reliable vehicle that isn’t so expensive.

This car should only be a tool from which it can transfer you from point A to point B while allowing you to allocate points to your credit score.

Your credit score will spike once you have paid the vehicle off.

Again, the point is to increase your credit score effectively without drowning yourself in debt.

What if I make two payments per month on my car?

Your credit score won’t really be phased by making more than one monthly payment on your car. It will only close the account quicker.

Credit scores evaluate on-time and late payments, not so much the number of payments within a statement.

#4. Pay Your Tuition

This will apply to those who carry a student loan.

If you’ve decided to further your education in order to start a career you’ll understand student loans are no joke.

While it takes most of us a long time to close these tuitions, they certainly play a big role in our credit history and help increase our score throughout the years.

While it’s easy to disregard them once we graduate or even years beyond, it’s important to continue paying your tuition off.

If you continuously paid for your tuition while you were enrolled in school, then you most likely graduated with some credit score to your name.

Tuitions can easily become a hinderance once we’ve begun to take on more from life in general.

Fortunately, tuitions can be put on forbearance.

If you find yourself needing to take some time off from student loans, take the opportunity to gather your finances before continuing to pay off the debt.

This strategy will allow you to safely put your loans on hold without it affecting your credit score.

Once you’re ready, start aiming for that excellent credit score!

What happens if you pay your student loans all at once?

If you were paying your student loans and all of a sudden come across the opportunity to pay off your entire tuition that’s amazing!

As soon as you close your tuition account you will see a huge spike in your credit score.

Every time you close any account, you should get an email regarding one of your accounts has been closed.

If you personally don’t have any student loans but your child does, pay it a few months to increase your credit score before fully paying it off and eliminating that liability.

#5. Pay Your Rent on Time

Though this might seem like a no-brainer, it must be mentioned.

Pay your rent on time in order to increase your credit score.

Whether you’re currently financing a home or renting, timely payments builds trust with lenders and property managers.

The last thing you’d want is to run into a bad rental history when applying for a bigger unit or a new home.

Impress lenders with a great record of paying rent on time.

This will increase your credit score and help you reach an excellent score quicker.

Rent should be one of your biggest priorities.

Utilities Also Help Increase Your Credit Score

Gas, electricity, water, garbage, & internet all help increase your credit score.

All bills have a due date and accumulate towards helping you reach an excellent credit score.

Keep in mind that if your utilities are not under your name (e.g., your spouse) then you will not earn points.

This applies to any bill you might pay but don’t otherwise have your name to.

What If I have A Lot of Debt?

If you’re have a ton of debt, continue paying down your debt.

Never stop paying down the minimum.

Although your debt continues to grow due to interest, you’ll have to keep paying it off so that your credit score is not affected.

Read: Debt Sucks | Here’s How To Pay Off Thousands In Debt

We published a post on the best strategy to pay off debt using the snowball effect method.

If you are having difficulty paying off your debt, be sure to read it and begin to start changing your life today.

Should I Open Multiple Credit Cards?

Opening multiple credit cards will result in a higher possibility of falling into credit card debt.

One credit card is enough to boost your credit score even after you’ve managed to pay off large amounts of debt.

Also, the more credit cards you apply for will result in a drop of credit score.

Keep an eye out for it as it will happen even when you apply for your first one.

Do not worry as it is normal and will eventually pick up after a few months of you establishing trust with the lender.

Do not open multiple credit cards and do not spend more as the lender increases your credit line.

It’s how they get ya! Do not fall victim of this quicksand.

What if I have a business and need the credit lines?

If you’re a small business and you need the credit lines to grow, then it should be no problem.

It only becomes a problem if you can’t repay your balance when you receive your statement.

What are the best type of credit cards to use?

Use a credit card that’s going to provide you with more value than just borrowing money in advance.

One of my credit cards give me cash back, or discounts on certain purchases.

This money accumulates over time resulting in money being saved over a long period of time. Another benefit this card has is that it has 0% APR during its first year.

0% APR cards can help you out of a sticky situation.

You can use this card to close the balance of another card that keeps rolling over in interest.

The 0% APR card allows you to pay your balance without the extra fees.

Cards like these can actually help you recover from debt and increase your credit score at the same time!

Will checking my credit score drop it lower?

Despite what someone older than you might have said, no; checking your credit score does not lower it.

What causes credit score to drop?

  • Late payments
  • Accounts sent to collections
  • Hard inquiries on an account
  • Any sort of temporary credit score check

The only exception on this list is the last bullet. Whenever you’re applying for something that requires a credit score check know that it will drop.

This is only temporary however and you can expect your score to rise after a few weeks to a few months.

How Do I Reach an Excellent Credit Score?

How Do I Reach An Excellent Credit Score?

An excellent credit score will require you to reach a 700+ credit score.

In order to reach a 700+ credit score you will need to have a great history of paying on time.

The more accounts you have open will mean the greater chance you have of obtaining an excellent credit score sooner than later.

While balancing a car loan, tuition, rent, and a credit card simultaneously can sound stressful, it’s certainly doable given that you are managing your finances properly.

Most people will buy too much car, or too much house and get themselves into credit card debt. It’s these sort of financial horror stories you do not want to live.

Even if you aren’t simultaneously paying different lenders every month, the important thing is that you’re responsible with the expenses you do have.

Pay on time every month and your credit score will continue to increase no matter how long it takes to reach an excellent credit score.

Frank Nez How To Get Clients To Pay You When They're Past Due

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How Can Late Payment Affect a Credit Report?

how can late payment affect a credit report?
Educational: How do late payment affect my credit?

It’s simple to overlook a payment when there are so many invoices to keep track of.

Late payment might not be a huge concern if you notice it immediately, but the longer your account is past due, the bigger the risk it presents to your credit.

Your credit report may include information on late payments, which will be archived for seven years.

Late payments might cost you money in addition to harming your credit when a payment is missed again within six billing cycles.

The price increases to $40 from $29 for the initial late payment.

Here you will find answers to questions such as “How long do things stay on your credit report?” and “How do late payments affect your credit?” if you recently missed a payment.

Late Payments in What Ways impact your Credit Score?

Your payment history accounts for 35% of your FICO score.

A formerly superb FICO score might decrease by 100 points or more with only one payment that is overdue by more than 30 days.

The drop increases in size as your score increases.

Your score will suffer more harm the longer this continues. Being over 30 days late hurts your score but being over 60 days late is even worse.

Missed payments also cause a bigger debt to be reported to credit agencies, which may raise your credit usage ratio.

Your FICO score is 30% based on how much credit you are using.

Therefore, when your ratio goes over 30%, that factor might damage your score.

Related: Credit Scores Are Easy to Raise: Reach Excellent

Is It Possible To Have Late Payments Removed From Your Credit Report?

Lenders and credit bureaus are limited in removing information from a credit report under the Fair Credit Reporting Act to erroneous or unverifiable data.

This implies that even though some online publications claim that you might be able to persuade a lender to erase a single error out of kindness, valid late payments cannot be deleted.

Waiting it out is the only alternative instead.

You will face bankruptcy if you don’t pay your bills for years.

Late payments are one example of negative information that often remains on your credit record for seven years.

Even though it would seem like a lengthy period, a few hiccups can be smoothed over in that time. 

Despite one or two late payments, your credit score might increase if you get your payments back on schedule.

Also, remember that creditors look at your whole history while reviewing your credit report, not just the negative items.

Even if the late payment on your credit report is real, it’s a good idea to get a fresh copy of it a few months later to ensure everything is still going well.

And maintaining active payment compliance is essential for progress.

How Can I Get Missed Payments Off of My Credit Report?

Make a Polite Deletion Request

Try getting in touch with your creditor if you feel you have a legitimate excuse for paying late, such as believing that your bill was set up for automatic payment or that you moved banks and unintentionally neglected to make your payment during the switchover.

If you have a solid payment history, you should let the creditor know about it and ask them to “give you a break” for your one mistake. They could agree if you are polite and have a strong payment history.

Create a Letter of Goodwill

Additionally, you can write your issuer a letter of goodwill.

The letter should contain the account number and address, a succinct justification for the missing payment, a description of how you intend to manage credit responsibly going forward, and information regarding the bad mark you desire erased and from which credit agencies report.

A goodwill letter won’t always be successful, but at least it won’t hurt your grade if it’s turned down.

Remember that your goodwill letter can take a few weeks to be approved or denied.

Contest Incorrect or Dated Late Payments

You can raise a dispute with a credit reporting agency by letter, phone, or online if one of your credit reports reveals an error or an old late payment.

The credit bureau should look into the matter and determine whether the data is accurate or too old and should have disappeared from your credit record.

If so, it’ll be taken down.

What Occurs If I Fail to Make a Payment?

Less Than 30 Days

You’re lucky if you forget to make a payment but remember before you’re 30 days overdue.

Therefore, if you pay the account before it is 30 days past due, it shouldn’t have any impact on your credit score. You could, however, be assessed a late fee.

The graph shows that the longer you don’t pay your bills, the bigger and tougher the sanctions will be.

credit score recovery time
Score Recovery Time.

Source: National Credit Federation 

While some lenders may process payments as rapidly as the same day, others may require considerably more time.

Don’t leave making your payment until the last minute to prevent experiencing processing difficulties.

More Than 30 Days

Your credit score may decrease by as much as 180 points when a late payment appears on your credit reports.

High credit score consumers can see a greater decline than low credit score consumers.

When organizing your payment, you shouldn’t rely on lenders who don’t reveal late payments until they are 60 days past due.

Your credit score may be negatively impacted the later you make your payments.

Over 60 Days Overdue

The likelihood that your lender may sell the debt to a collection agency increases with the length of your delinquency.

These organizations are renowned for using forceful methods to obtain cash.

If you default on a secured loan, such as a car loan or a mortgage, the lender may try to recuperate their losses by forcing you to lose your house or vehicle, which might have more severe consequences.


Your credit record will include late payments for a maximum of seven years.

When a late payment is recorded on your credit report, it may reduce your credit score, making it more difficult to receive credit—or credit with a favorable interest rate—or to get credit at all.

Additional fees and penalties from the card issuer may result from a late credit card payment.

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