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How to Raise Your Score to 740

Here are some ways you can build your credit and possibly even achieve a 740 score.

Get a major credit card

If you are new to the credit game you may only be able to qualify for secured or department store cards. These are great for starting out but eventually you will need to apply for a major credit card (VISA, Master Card, American Express or Discover) if you want to get your scores into the 700 range. If you are just beginning to establish your credit, or if you are re-building after a run of bad financial moves, it will generally take you about 12 to 18 months of responsible financial behavior before you will be accepted for a major credit card. Be diligent with your secured or department store card and you will eventually be able to qualify for a major credit card.

Use credit, but be smart about it

You do not have to pay a monthly interest charge in order to get the benefits of using credit. Make purchases, mind you manageable ones, with your credit card and pay off the balance each month. Remember not to max out your card, even if you are able to pay off the full amount at the end of the billing cycle. Keep your balance below 30% of the available limit. Get it down to 10% and you will reap the greatest rewards to your score.

Spread out your debt

More than a third of your FICO score depends on how much of your available credit you're using (credit utilization ratio). The FICO formula looks favorably on wide gaps between your balances (whether you pay them off each month or not) and your limits, especially on credit cards (revolving accounts). Even though you'll still be rewarded for paying down installment debt, such as mortgages and auto loans, your scores improve much more dramatically when you pay down revolving debt such as credit cards. When it comes to credit scoring, it's better to have small balances on several cards than a big balance on one card.

Keep accounts open and active

While you are working on raising your scores, do not close any accounts. You also need to be sure your creditor doesn't close your account due to inactivity (a closed by grantor listing looks pretty bad on your credit file). It may be a hassle to monitor multiple accounts, but if each one is set up on auto pay, there isn't much managing to do. Consider reserving the account you don't regularly use only for one thing, such as a utility payment. Something that is non-discretionary that you would be paying for anyway.

Have a healthy mix of credit

It's good to have at least two revolving accounts and one installment account. The credit scoring formula wants to see how you will handle different types of credit. Once you have a good mix, be careful about applying for new credit. More is not necessarily better. The amount of credit available to you can be perceived as dangerous by potential lenders. You will also get dinged with inquiries. Although the average inquiry will usually only cost you around 5 points, every point counts when you are in the market for a major loan (like a mortgage).

Monitor your credit reports

We say this over and over, but you need to regularly review your credit reports. You can never assume that all of your positive efforts are being reported. You want every positive action you make count. You also can't assume that everything on your report is accurate. There is no quality control department at the credit reporting agencies. If there are mistakes, it will be up to you to bring the bureaus attention to them and request their correction.

If you are going to be judged so strictly by what's on your credit report, then you ought to make sure it is accurate.

Be patient

Achieving healthy credit takes time. You could possibly see some improvement in as little as 30 days, depending on the measures you have taken. Usually significant improvements won't be seen for several months, maybe years if you have serious damage and aren't taking other credit repair measures to accelerate results.

As our client however, you will see results much faster than if you went at it alone. Just remember to implement as many as the above pointers as you can. Doing these things, in conjunction with our efforts, that coveted 740 may just be around the bend.