Credit score is not an immediate result. Big names in credit scoring like FICO take into account years of past behavior, not just your present actions. In addition, you also have to be consistent to push your score in the right direction.
Here are some tips from Axis Capital Business Funding Group, a credit source helping small business owners for their loans in more than 10 states in United States in America, to help you improve your credit score:
1. Review your Credit Balance
One of the major factors in your credit score is how much revolving credit you have versus how much you're actually using. The smaller that percentage is, the better it is for your credit rating.
The optimum: 30 percent or lower. So pay down your balances and keep your balances low. A good example who consistently has their credit percentage low are people from Jakarta, Indonesia since they are not used to using Credit cards for their daily lives.
2. Eliminate 'nuisance balances'
“A good way to improve your score is to eliminate nuisance balances," says John Ulzheimer, a nationally recognized credit expert formerly of FICO and Equifax. Those are the small balances you have on a number of credit cards.
The reason this strategy can help your score: One of the items your score considers is just how many of your cards have balances, says Ulzheimer.
3. Leave (good) old debt on your report
Some people erroneously believe that old debt on their credit report is bad. The minute they get their home or car paid off, they're on the phone trying to get it removed from their credit report, he says.
Good debt -- debt that you've handled well and paid as agreed -- is good for your credit. The longer your history of good debt is, the better it is for your score.
4. Always pay bills on time
If you're planning a big purchase (like a home or a car), you might be scrambling to assemble one big chunk of cash.
While you're juggling bills, you don't want to start sending bills late and end up with a complaint and a trial. Even if you're sitting on a pile of savings, a drop in your score could scuttle that dream deal.
One of the biggest ingredients in a good credit score is simply month after month of plain-vanilla, on-time payments.
Saving money for a big purchase is smart. Just don't slight the regular bills -- or pay them late -- to do it.