Why Your Credit Score Might Increase in 2014
Find out how changes in a popular credit scoring model may cause an automatic increase to your credit score.
Laura Adams, MBA
If you’ve been struggling to pay off medical debt, you probably know that it’s dragging down your credit scores. However, there’s some good news from FICO, a leading credit score company. They recently made an announcement about changes that may cause your credit score to rise.
How’s that? Well, they have a brand-new scoring model called the FICO® Score 9 that will be available for U.S. lenders starting in the fall of 2014. FICO says that if unpaid medical debts are the only black mark on your credit history, the new scoring model may boost your score by 25 points!
Another challenge to building good credit, especially when you’re just starting out, is having too few credit accounts in your name. FICO says its new model will also help out consumers with “thin” credit files.
No matter your situation, follow these 3 important tips to build the best credit scores possible:
Credit Tip #1: Correct your credit errors.
Unfortunately, the majority of consumers have errors in their credit report. Thankfully, it’s easy to correct them.
Don’t let errors in your credit file cause you to overpay for credit cards, installment loans, or insurance policies. These inaccuracies—such as an incorrect loan balance—are painting the wrong picture about you to creditors.
Review your credit reports at least once a year for free at annualcreditreport.com so you’re not in the dark about what can be seen about you.
I created a video tutorial that shows step-by-step how to get credit errors corrected; it’s part of my free Credit Score Survival Kit.
Credit Tip #2: Pay credit accounts on time.
Whether you pay bills on time or not is called your payment history. It’s typically the biggest factor in how credit scoring models evaluate you—so it’s really important.
Do everything in your power to never let a payment fall through the cracks. Use email alerts, calendar reminders, or automatic bill payments to get funds transferred in plenty of time to beat the bill due date.
Credit Tip #3: Use credit accounts strategically.
Having a good credit score is how you demonstrate that you’re responsible and worthy of the best rates from credit card issuers, auto lenders, home lenders, and insurers. Having a poor score tells them that you may not pay bills on time or repay debts.
In order to build good credit scores you have to have a moderate number of credit accounts—and you have to use them responsibly.
Download the FREE Credit Score Survival Kit!
For more strategies to raise your credit score fast, be sure to get my Credit Score Survival Kit. It’s a free multimedia tutorial that’s packed with information to help you take control of your credit so you qualify for low-rate loans, cheaper insurance, and many other benefits that come with having good credit.
Connect with me around the web on social sites like Facebook, Twitter, and Google+
Other Links You Might Like:
What to Know Before You Cancel a Credit Card
7 Essential Rules to Build Credit Fast
What You Should Know About Credit-Based Insurance Scores
Credit Score Survival Kit – a free tutorial to build your credit scores
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Credit Score Concept image courtesy of Shutterstock
About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.