If you have been looking for information on how to increase your credit score, then this article will provide you with the basics. There are a lot of different factors that go into the calculation of credit scores and one of them is the number of open accounts. The higher number of accounts, the more “creditworthy” you are, which improves your credit score. If you have lots of credit available to you, then you will probably have a better chance of finding the best rates on your purchases and that will lower your debt ratio, which will give you the chance to save money on interest.
How many accounts do you currently have open? When you ask your creditors about their maximum limits for credit, they want to know exactly how much you owe them. So the more accounts you have open, the lower your total debt ratio will be. This means the higher your score, the lower your debt ratio will be. The accounts you do not use are an asset to yourself, so keep those accounts open but make sure you keep them organized and current.
Your total debt ratio is the amount of money you actually owe divided by the total amount of credit available to you. It is called your credit score because it is a measurement of your financial responsibility. The longer you have held a credit card, the more debt you have. If you only have the smallest balance on the card, then it does not create too much of a credit score impact. But if you have hundreds of credit cards and a high debt ratio, it will lower your FICO score. That is why it is important to manage your credit cards well to prevent that problem.
Keep your accounts in the highest priority order. You should always pay off your oldest credit cards first. They have the greatest impact on your credit score, because older accounts generally have a lower balance and more history. When you pay off the oldest accounts, your next oldest accounts will move up in priority. This continues until all of your credit cards have been paid in full and you are left with the most recent first accounts on the list.
Keeping your oldest credit cards at the top of the list, while paying the newest to the end creates a hierarchy of responsibility for you. This gives the lender a sense of your responsibility and shows them you are someone they can trust. The next thing you want to look at is the length of time you have had your credit accounts open. A recent opening tends to create a better credit score outlook than an older account that has stayed open for quite a while.
There is no exact formula for calculating your credit score. It will vary depending on your overall financial history and how many different lines of credit you have opened. But one thing is for sure. Anything over 700 is considered a good number when it comes to credit scores. So make sure that you do not have any accounts open under that number. When you are getting ready to get a credit card, be sure to check out the offers carefully and see what is the highest credit score outlook for the card you want to get. TGS removes the overwhelm that occurs with credit card account management. Our app integrates directly with your financial institutions and it is a cross-credit platform to pull all the information you need together to make the best decisions as you budget the money spent from your various accounts. Please download The Good Steward Financial System on your smartphone. Whether you have an Android or an Iphone we have you covered. Staying informed is a phenomenal way to improve your fico credit score.
Leave a Reply