1/15/2024 0 Comments Turbotax credit score methodFirst, it keeps your total credit limit higher, which makes it easier to use just 10% of that total.įor example, let’s say your total credit limit across all your cards is $12,000. Keeping cards open, even if you don’t plan on using them, does a couple of great things to build credit. Keep cards open over time (15% of your score) “Raising your credit line automatically decreases your credit utilization, so it’s a nifty way to help your score without costing you a dime.” 3. Gonzalez also recommends asking for a credit limit increase if you can’t manage to pay down your credit card debt right now. Sticking to this can keep you away from bad credit - so keep your credit card balances in check! Instead of maxing those cards out, keep them to no more than $600 total between the two of them, which is 10% of that $6,000. If you reduce your credit utilization from 80% to 10% or less, for example, you should see a major bump in your score.įor example, if you have two credit cards that each have a $3,000 maximum, that’s a total of $6,000 you could borrow. “For maximum effect,” notes Gonzalez, “just pay off your debt.” When you pay down debt, your score improves not just because of your reduced debt level, but also because of lowered credit utilization, or the amount of available credit that you currently use. The good news? This is likely to be the easiest way to improve your score over a short time period. The amount of debt you have is nearly as important as your payment history when it comes to your credit score, clocking in at 30% of your FICO score. The best way to mitigate missed payments and keeping your credit card accounts current? Set up automatic payments and make sure any other authorized users are on board with the plan! 2. Check in with each of your credit card issuers and other lenders to make sure you don’t miss any due dates. If you want to raise your score in just six months, make sure you keep your accounts current - missed payments are step backwards. Overall, your payment history counts for 35% of your FICO score, so this is an important area to attack if you want improvement. He continues, “By the same token, the further you can put late payments in the past, the more your current payment record will stand out.” “The longer you can make payments on time, the higher your credit score will tend to go,” according to L.A.-based CPA Jeff Gonzalez. Unfortunately, this is the hardest to increase over a short time period - like six months. The most critical part of a good credit score is your payment history. Want the quick and easy takeaways? Jump to them. However, you can move your score in the right direction by improving your credit behavior across the FICO scoring categories. You won’t be able to predict the exact number of points you can increase your score by over a six-month period. Now, the exact methods behind FICO’s calculations aren’t exactly public knowledge, but they do publish the broad categories used for scoring - along with the percentage of importance for each category. While there are variations in the scores used by different credit reporting agencies, the industry-standard score is issued by FICO. So what exactly goes into your credit file? Let’s talk about it.Ĭredit scoring is a complex science that’s something of a secret to the general public. When it comes to personal finances, knowing your credit score is extremely important.
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