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2 Simple Tips to Assist with Improving Your FICO Score
Position yourself to have high creditworthiness
In the United States, FICO Score is used by 90% of top lenders to determine your creditworthiness. According to Elite Personal Finance, the average FICO Score in the United States in 2021 was 716, a new all-time high. 716 is considered a Good FICO Score. To get to the Very Good (740–799) and Exceptional (800–850) FICO Score ranges, the following are a couple of tips to assist you with that:
1. Pay Your Full Statement Balance on Time Every Month
2. Improve Your Credit Utilization
1. Pay Your Full Statement Balance on Time Every Month
Paying your full statement balance on time every month is important. When it comes to your payment history, that makes up 35% of your FICO Score calculation. By being a responsible user of credit and paying your full statement balance every month, you will see your FICO Score improve over time. If your credit card offers it, set up auto-billing for your account to automatically pay your full statement balance every month. Take the complexity out of improving your FICO Score.
2. Improve Your Credit Utilization
Improving your credit utilization is important because the amount of money you owe makes up 30% of your FICO Score calculation. You may hear that you should not spend more than 30% of your total credit limit when it comes to credit utilization. If your total credit limit is $10,000, you should not be spending more than $3,000 per month across all your credit cards. The lower the credit utilization, the better. If you can consistently have a credit utilization below 10%, you will see improvements in your credit score.
As of May 2022, my FICO Score is 762 using Experian data. I currently have five credit cards and one auto-loan on my credit report. I pay my full statement balances on time every month, and the credit utilization is typically 2–3% every month, with a total credit limit of $33,300. I share that to let you know that I have been able to implement what I have written in this article. Let me know any other tips you have found useful in the comments.
