How to raise your credit score 100 points
If you are preparing to apply for a new credit card or a loan, you'll want to achieve the highest credit score possible. While FICO cannot provide an exact correlation between individual actions and specific points earned because there are so many variables in each credit score, there are steps you can take that will tend to raise your score. Some of these steps will have an almost immediate impact, while others may raise your credit score by as much as 100 points over time.
Check your credit report. Get a free credit report from each of the three credit reporting agencies (Equifax, Experian and TransUnion) once a year at annualcreditreport.com. Start by looking for errors that lower your credit score and take action to correct them. Next, review the negative factors in the report and focus your attention on improving them, such as paying bills on time or reducing debt. Pay your bills on time. Set up automatic payments using your bank's bill pay service or sign up for e-mail alerts from your credit card company if you sometimes have trouble paying bills before the due date. Get caught up on past-due bills. If you missed a payment, get current as soon as you can. A missing payment can lower your score by as much as 100 points. It may take a some time for this black mark to fade from your credit report, but take heart: your credit score usually depends more on your most recent activity than on past credit problems. Keep balances low on your credit cards. A common rule of thumb is to keep the balance at or below 10 percent on each line of credit to improve your credit score. A balance close to or over the limit will significantly reduce your credit score. Pay off debt rather than continually transferring it. While a balance transfer to pay zero interest or a lower interest rate on your debt can be worthwhile, make sure you pay down the balance before increasing your debt load. FICO says paying down your overall debt is one of the most effective ways to boost your score. Apply for new credit sparingly. Only apply for new credit when you actually need it and not simply to boost your available credit. Opening several new credit accounts in a short time frame can lower your score. Don't close paid-off accounts.How Transferring Credit Card Balances Can Save Money
N theory, a balance transfer credit card is a great idea for anyone wanting to reduce the amount of interest they pay on outstanding credit card balances. When used correctly, these cards can seriously help some people to pay down their debts quickly and get back some control over their financial situations.
However, if you don’t fully understand how balance transfer cards work, you could find you end up in a worse financial situation than the one you started at.
Using Balance Transfer Credit Cards to Reduce Debt
If you’re already paying a huge interest rate on your existing credit card debt, you can definitely benefit from a balance transfer card with a low introductory interest rate.
Ideally, you would transfer the balance from your old account over to your new account and you’d instantly be paying much less interest on the amount you owe. This effectively means every payment you make goes directly towards paying off your debt levels instead of covering interest costs.
Unfortunately, there are many customers who find that it’s not always as easy as it looks, especially when you add in some of the pitfalls.
Things to Watch For
Before you apply for any balance transfer offer you see, take some time to do a bit of comparison shopping. Far too many people believe that a card offering a 0% interest rate for 6 months will be the best option for them. After all, you can’t get any lower than zero interest.
What those people forget is that 6 months isn’t a really long time, and at the end of that introductory period the low interest rate expires to be replaced with a much higher purchase rate.
So if you haven’t repaid your entire outstanding balance before the end of those first six months, you could find your interest bill goes right back up to where it was before you started.
Take a moment to work out how much you’d need to repay each month in order to reduce your debt down to a zero balance before the introductory period ends.
Example: if you owe $2,500 on your credit card debt, you’d need to pay at least $417 per month in order to pay it all off.
Opt for Longer Term
Not all balance transfer cards are set over a short term. In fact, there are some that extend for up to 18 months. If you know your budget won’t allow you to repay your entire balance before the low interest rate ends, work out whether a longer term card might be right for you.
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