There are numerous methods available to help you increase your credit score. However, there are some behind-the-scenes developments that can lead your credit score to rise without you doing anything. So, before attempting to repair your credit, see whether any criteria can assist you in your quest for a higher credit score.
1. Your Accounts Aging
Credit accounts, like excellent wine, improve with age. Mind you, not your age, but the ages of all your credit lines (kept in good standing, of course). For example, the length of your credit history accounts for around 15% of your score in the FICO scoring models. All else being equal, the longer your credit history, the higher your credit score should be. The length of your credit history considers how long you have had credit accounts open, including the age of your oldest account, the age of your newest version, and the average age of all your funds.
2. The ‘Ageing Off’ of Negatives
Regarding your credit record, certain loans have an expiration date. A collection account, for example, is intended to be removed from your credit record seven years plus 180 days after it became delinquent. You can also dispute the credit report inaccuracy with the significant bureaus if it is still on your report.
3. When the Issuer increases your Credit Limit
Credit scores are determined partly by how much of your available credit is utilized. Your total debt, including “debt usage” or “utilization,” accounts for around 30% of your credit score. That is more than any other factor except on-time payment, which accounts for approximately 35% of your score.
Increasing your credit limit — as long as you don’t increase your debt — might be beneficial to your credit score because it leads to reduced debt use. And sometimes, without your asking, issuers will evaluate your file and conclude that you’re ready for a rise in credit limits. You can compute your overall utilization by adding up all of the reported balances on your revolving accounts (credit cards, lines of credit) and dividing the total credit limits by that figure. Credit scores also consider the utilization rate of each account.
4. When Taking Out a Loan
While the hard inquiry that comes with applying for a loan may lower your credit score initially, it can boost your scores in the long run if the account is different from other types of credit you already have.
(Of course, you keep it in good standing by paying on time.) For example, if you already have credit cards and apply for your first auto loan, your score may take a hit from the hard inquiry and new credit line, but this loan may boost your scores in the long run by increasing the “diversity” of your credit profile.
5. If You Misplace Your Credit Card
It’s not always the case, but your credit score may improve if you report your credit card as lost or stolen. When you report a lost or stolen card, some issuers deactivate the account, generate a new account number for you, and transfer everything of your data, including the original open date, to that new account. The new account is subsequently added to your credit report.
If the initial account was open for an extended period, you now have two trade lines with that amount of history, increasing the average age of your credit. As mentioned earlier, credit age makes up roughly 15% of your credit score.
Because not all card issuers follow the same procedures when reporting a lost or stolen card to the credit bureaus, attempting to raise your credit score by claiming your card was lost or stolen when isn’t a good idea.