After years of hard work, I have climbed back up the FICO ladder to a better credit score. It took time and effort but my reward including better interest rates and more credit options. However, I was not satisfied with a mere 700 credit score - - I wanted a higher credit score so that I could get the lowest interest rates possible.
Why work to increase a good credit score?
You may think that you get the best interest rates with a credit score in the 700s but you would be wrong. The lowest interest rates are reserved for the top credit score range (800 - 850). In addition to receiving the best interest rates available, having a higher credit scores has other advantages like:
· The top range of credit scores also has more bargaining power. By having a credit score of 800 or more, I am able to negotiate better payment terms, lower down payments and other credit terms in addition to a lower interest rate.
· I save money on car insurance. Insurance companies use credit scores in their decision to raise or lower your insurance rates.
· I get lower cell phone plans (currently $65 per month for two lines). Cell phone providers will charge less for plans if you have a high credit score.
· I can deal with a better quality of lender. Higher interest rates mean that I no longer need to go to less reputable lenders that take advantage of those with low credit scores.
How did I get my good credit score even higher?
I make my payments on time, keep my account balances at about 40% of the credit limit on the account and keep inquiries low by not applying for every credit card I am offered just to get the freebies they offer with a new account. I still wanted more so I pulled out the big tricks to raise a good credit score even higher.
· Adding an installment loan - With the exception of my mortgage, the only accounts on my credit report were credit cards. It has been 10 years since I have had a car loan. Therefore, I added a small installment loan (i.e. a small personal loan or car loan), made all payments on time and saw an increase of my credit score.
· Check account credit limits - Credit card balances that exceed your credit limit can decrease your credit score. I checked the credit limits reported on my credit report and found two that were reported incorrectly. I contacted the company to request that this be corrected immediately. Once this was corrected, my credit score increased because it no longer appeared I was maxed out on those accounts.
· Use an old credit card again - Part of your credit score is determined the length of your credit history. I had a couple of old department store credit cards that I had not used in years. I went shopping and then made payments on them for several months. This caused my length of credit to increase because I had opened these cards right after I finished college. This also increased my credit score by several points.
By taking these additional steps, I was able to raise my credit score to get even more benefits.
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