Q: How to improve my credit score?
First, everyone’s credit history is different, so make sure you have a VA Specialty Lender pull your credit and run a Credit Simulator to determine what your exact perfect plan looks like.
One of the main things credit bureaus are scoring on is the percentage of available credit you’re using. That means, if you have one 10k card with a 5k balance, you’re using 50% of available credit.
Here’s a rule of thumb: You will need to keep a balance on your credit cards to get the maximum benefit to your credit score. However, you will want to keep your balances under 10% of the available credit limit.
Don’t Max Out Your Credit
In general, once your balances are above 50% of the limit your credit scores will drop dramatically. Even if you max out your cards because of hardship or an oversight in your busy life, your scores will still be affected in a negative way.
A maxed out credit card looks BAD to the credit bureaus, and the only way to fix it is to PAY THEM DOWN.
If you’re having trouble doing that, the first rule is to STOP SPENDING on the card and create a plan to pay it down each month until it’s back under 10%…
Once you’ve made it there, try to pay it down to 5% so you can remind your card who is boss!!
Also, DO NOT pay off or close any of your credit card accounts, this can have a negative impact on your credit score. You will need to keep cards open with a small balance, in order to have the best credit score possible.
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