Tips for increasing your credit score

The Street

Christian Widhalm, CEO of Bloom Credit, joins TheStreet to share some tips for increasing your credit score.

Transcript

00:00All right, let's get down to the practicalities.

00:02What are your best tips for someone increasing

00:06their credit score?

00:08So credit scores are really interesting.

00:10There's two main credit scores that are out there.

00:14One, which is kind of the godfather of them,

00:17is FICO, right, the Fair Isaac.

00:19The other is Vantage Score.

00:21So there's two that are typically out there

00:23that people will see.

00:24They both are typically out of the 850 range

00:26where they kind of cap out.

00:27So if someone has an 800 credit score

00:29that's deemed like excellent, right,

00:30you're very, you know, super prime.

00:32The reality is is that those formulas

00:35live and reside within black boxes, right,

00:38where it's very hard to actually go

00:40and tell somebody exactly what the impact

00:42of their credit score is gonna be based upon activity.

00:46What I can tell you is that those scores

00:49typically factor in certain aspects

00:52of your overall credit profile when generating a score.

00:56The heaviest one, I think at like 35%,

00:58is positive repayment history.

01:01Have you actually been paying your bills on time

01:02and not being late, right?

01:04The other one is credit utilization.

01:05So those, I think, combine to around 70%

01:07of actually the weight of what's in the score.

01:10And credit utilization, I have a $10,000 credit line

01:15on my credit card, but I have $9,000 in balance.

01:18That's a 90% utilization, right?

01:19That's considered high.

01:21That would do something to actually

01:22potentially lower someone's credit score.

01:24So one is to open up credit products, right?

01:28But be responsible with opening up credit products.

01:30Make sure you're actually controlling the utilization rate.

01:33Make sure you're not actually applying

01:34for too many products at once,

01:36because those inquiries that ultimately

01:38hit on your credit report can also potentially deem you in.

01:42But the other is to start taking advantage

01:45of new types of credit building products

01:47that are emerging in the market

01:49that really take other types of data

01:51that we talked about, checking account data,

01:52your rent, your telco payments,

01:54and your utilities payments.

01:55Those can be converted into real trade lines,

01:57and trade lines is how they're showing up

02:00on your credit report, and they have real score impact.

02:03So there's multiple solutions or steps that are out there.

02:07Consumers just need to be aware of them all.

Category

Transcript

Recommended