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Credit report with an “A” grade
Tips for improving your score on the new system
The credit bureaus have come up with a new, unified scoring system called VantageScore. Here are some tips for how you can improve your score and get an “A” grade. It’s not that hard; it just takes some diligence.
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VantageScore gives you a number and a letter, so you want an “A” grade
The new VantageScore system designed by the credit bureaus to simplify credit scoring, uses a numerical scale as well as a letter grade system. Scores are assessed “grades” just like your work was back when you were in school. While the old system had scores that ranged from 300 on the low end to 850 at the top, the new system, used by all three bureaus, is as follows:
- 901-990 - A
- 801-900 - B
- 701-800 - C
- 601-700 - D
- 501-600 - F
Scores from the old system don’t directly translate; an 800 on the old system might be a 900 on the new one. But what if your score is on the lower end? How can you improve it?
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Here are some tips for some things you can do to improve your scores in order to try to get an “A” grade for your finances.
- Pay those bills - This one is always at the top of the list, and for good reason. Lenders want some assurance that if they lend you money, you will pay it back. Therefore, your past history of paying bills in full and on time weighs heavily on your score. If you haven’t been making payments in a timely manner, start doing so now. And don’t pay just the minimum; pay more than that in order to reduce your debt load.
- Keep your debt ratio to a reasonable level - Lenders look to see how much you owe and compare it to the most you could possibly borrow. The greater the difference, the better off you are. That is your debt ratio. If you have a history of borrowing at or near your charge card limit, that suggests that you could be borrowing more than you can safely repay. Try to reduce your balance to no more than 30% of your total available borrowing.Get some age on your history - Be careful when you cancel accounts. You want to have a “seasoned” credit history, with some accounts that you have had for several years. This assures lenders that you have been financially responsible for a long time, and that lets them sleep better at night. If you need to cancel an account, cancel a newer one, rather than one that you have had for a long time.
- Spread that financial health around - Having a few charge cards in your report is nice. Having a car loan, a paid-off student loan, a few utility bills that have been paid on time and a few charge cards is better. Lenders like a diverse financial report that shows that you are good at paying a variety of bills.
That’s all there is to it. Pay your bills on time, have a variety of financial transactions and don’t borrow too much money. If you have a lot of debt, pay it down. In time, from a few months to a year or so, these tips will increase your score and put you well on your way towards getting an “A” grade from lenders.
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