A better credit score that’s in the 700 range is a game changer.
Lenders use your credit score as a measure of how trustworthy you are as a borrower. A better credit score — considered high by lenders — will get you approved for more loans and mortgages, and most likely with lower interest rates.
There’s no magic formula to getting a 700 score, but there are effective methods to building credit
Check your credit report.
According to a Consumer Reports investigation conducted this year, over one-third of Americans had an error on their report. One of our customers found almost 90 cases of fraud on his credit record!
These errors — like outstanding balances that you’ve actually paid off — can negatively affect your credit score. You can dispute any errors with the major credit bureaus for free. If they’ve made a mistake, they’ll usually remove the errors within a month.
Always pay on time.
Only about 0.5% of credit accounts have past-due payments.
Payment history is the single most important factor in your score. These include payments for credit cards, car loans, student loans, and mortgages.
A missed or late payment can stay on your credit report for up to seven years. The good news, however, is that older slip-ups count less in your score. To build credit history, make sure your payments are always timely by setting up auto-pay. Most credit card and banks will have auto-pay as an option so you can pay on-time and build credit at the same time.
Keep your credit utilization low.
The average American credit card balance is $5,525, with a utilization rate of about 25%. So how does this stack up with what’s best for your credit score?
Credit utilization is the second most important factor in your score. It’s the ratio of how much credit to how much you can use, or your credit limit. The lower, the better.
Kikoff Credit Account is designed for extremely low utilization. As an example, the Kikoff Basic Credit Account costs $60. You pay this off monthly with $5 payments that are reported against a $750 line of credit. This means you use only 8% in credit utilization.
Experts recommend keeping this rate under 15%! High utilization could signal to lenders that you’re relying too much on spending with credit — and may have trouble with making payments in the future. Be sure to pay down your balances as much as you can!
Think twice about closing a credit account.
Your average account age also helps determine your credit score. The longer your credit history, the better. Don’t close a credit account just because you’re not using it.
Sometimes it makes sense to cancel a credit card that you’re not using. But for the most part, keeping an old account open will help your score. Keeping balances low on that account will also improve your credit utilization, which can boost your score even more
If you’re thinking about cancelling an account because of its high annual fees, you can also often downgrade to another card that’s cheaper or free! You’ll likely only be able to do this after one year with the original card, but this will let you keep your account history.
Diversify your credit mix.
Credit mix makes up 10% of your credit score. The more variety, the better. Lenders want to see that you’re capable of handling different credit types — loans, credit cards, etc.
The Kikoff Credit Account comes with a revolving credit line. Unlike a car loan or mortgage, it doesn’t have a fixed number of payments or length of time. You can continue to renew and can stay open for as long as you want.
Our credit builder also targets all three factors we’ve mentioned in this list: payment history, utilization rate, and account age. Together, these make up 80% of your credit score.
The Credit Account has 0% interest, no hidden fees, and only costs $5 a month. We relay every $5 payment you make to the major credit bureaus, so you get an updated credit report every month.
Higher credit opens doors — and getting started is the most important part of your credit journey. If hundreds of thousands of people are building credit with us, we must be doing something right
