May 28th 2024.
Published on April 21, 2018, the topic of credit is one that should not be taken lightly. It can either work in your favor or work against you, depending on how you handle it. To gain a better understanding of how to improve your credit score, BLACK ENTERPRISE spoke with Christia'n Annice, the founder of eMillions+, a credit repair agency. Annice shared four valuable tips that can help raise your credit score.
First and foremost, it is essential to pay your bills on time. Delinquent payments and collections can have a significant negative impact on your credit score. In fact, according to FICO data, even a 30-day delinquency can cause a drop of 90 to 110 points on a FICO Score of 780 for someone who has never missed a payment on any credit account. To put this into perspective, Equifax states that a consumer with a 680 FICO Score and two late payments would see a drop of 60 to 80 points after being hit with another 30-day delinquency.
Another crucial factor is to keep your credit card balances low, also known as your utilization percentage. This percentage is a significant contributor to your credit score. To improve it, pay down any credit cards with high balances relative to their credit limits. You can also try negotiating with credit card companies to increase your credit limits.
It's also important to be mindful of how often you apply for new credit accounts. While it only accounts for 10% of your FICO score, it is still something to consider. On the other hand, opening new accounts can have a more significant impact, especially if you have only had credit for a short time. MyFico explains that new accounts can lower your average account age, which can significantly affect your FICO Scores if you don't have a lot of other credit information.
Finally, instead of moving your debt around, it is crucial to pay it off. While some people use the strategy of transferring their debt to different cards, the only surefire way to positively impact your credit score is to pay off the debt entirely. As the saying goes, "out of sight, out of mind." This applies to debt as well. The less debt you have, the better it is for your credit score.
In other news, President Biden has announced another round of student loan debt cancellation for 160,000 borrowers. This is excellent news for those struggling with student loans, as it will significantly impact their credit scores in a positive way.
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