Working to achieve the best credit score is a worthy goal; after all, having good credit opens the door to an array of financial benefits. But hitting a magical number just to say you did it isn’t the best use of your time or other resources. In addition to understanding the best credit score, it’s equally important to understand how to best reach your credit goals, which won’t necessarily correspond to a single number. Here’s what you need to know.
The Highest FICO Score (and Why You Don’t Actually Need It)
FICO is the most widely used credit scoring model and is utilized by lenders and credit card companies to determine your financing approval and your interest rate. On the low end of the spectrum is a score of 300, while consumers with the highest possible score hit an 850.
While the achiever in you may set your sights on 850 as your ultimate goal in the credit repair process, it’s actually not necessary. Why? Because lenders and other creditors use credit score ranges to offer the best rates. As long as you’re in the “excellent” category, you’ll get the same low rate. Depending on the type of financing you apply for, an excellent credit score could be anywhere between 720 and 760. If you hit that benchmark, you’ll receive the same interest rate as someone with an 850.
How to Improve Your Credit
If your current credit score falls below the “excellent” category, it’s definitely in your best interest to fix your credit. There are a number of ways you can do this, no matter what your current financial situation may be. If you’re a DIYer who wants to take advantage of the best credit score possible, you just need to follow these three steps before you start seeing noticeable improvements.
1. Dispute Credit Errors
If you don’t already have the best credit score, the first major step in the credit repair process is ensuring the accuracy of your current credit report. You can request a free copy every 12 months from each of the three major credit bureaus. Once you have them, you’ll see every credit line you’ve had for the last several years. Make sure each one is accurate, especially when it comes to late payments and delinquencies.
When you find something that isn’t current, you can send a credit dispute to the credit bureau. If done successfully, you can get the negative item(s) removed and improve your credit score. The credit bureaus allow you to submit disputes online and through the mail to make it as convenient as possible. They’re legally required to investigate your dispute request within 30 days.
2. Lower Your Debt
Once your credit report is updated and accurate, you can still take some steps to improve other areas. One of the most important factors affecting your credit score is your debt, especially revolving debt from credit cards or another line of credit. Try to pay down that expensive revolving credit as quickly as possible. As you do, you’ll notice a distinct increase in your score, getting you closer to the best credit score possible.
Even if you pay off your credit card balance each month, your charges can still be bringing down your credit score. Your credit card company may report balances to the credit bureau before your payment is due. Try making payments at least twice a month in order to lower your balance amount before balances are reported.
3. Make Your Payments on Time
Most importantly, preserve and improve your credit by making your payments on time each month. Even a payment that is 30 days late can cause a drop in your credit score. Every 30 days after that can cause another dip, so don’t let the same bill drag down your credit score multiple times.
An effective way to avoid this problem is by signing up for auto bill payments, either through your bank or each specific creditor. As long as you keep on top of your bank account balance to avoid overdraft fees, you can successfully fix your credit with on-time payments each month.
Need Help Fixing Your Credit?
A comprehensive credit repair plan can help you get the best credit score possible in the shortest amount of time. Enlisting the help of a professional credit repair service ensures you’re maximizing your opportunity to improve your credit score.
Sign up today for a free consultation from Ovation Credit to find out how we can help.