The higher your current credit score is, the lesser the interest rate your lender will impose on your mortgage, car loan, etc. If your score is somewhere in the region of 760-850, you’re looking at a more affordable rate than if your FICO score had dropped below 650. A 650 credit score could put you at a possible 4.5%-5.5% interest rate for a 15 or 30 year mortgage. And that’s if lenders decide to trust you with their money at all.

That near 1% difference can translate to tens of thousands of dollars in the long run. Things get thicker when you wish to rent a luxurious apartment in your neighborhood, your income is high enough for the asking rent, but because your credit score is below 600, the property manager turns you away. It is, therefore, imperative that you maintain your rating as high as possible to save yourself such unnecessary costs and inconveniences. Here are three necessary steps that you can follow to raise your FICO score above 650.

1) Clear Any Illegitimate Negative Inferences on Your Credit Report

It’s strange that many people do not know how their credit reports are like even though everyone is entitled to a free copy every year. If you’re yet to check with either of the three authorized credit bureaus- TransUnion, Equifax, or Experian, then it’s time you contacted them and request your report. Once you get it, check for any wrong information therein and file a complaint so that it’s cleared. Some of the common misinformation that could be hurting your credit score include:

• Closed accounts showing up as open accounts,
• Mistaken identity- you end up carrying the debt burden of someone with a name similar to yours,
• Paid balances reflecting in the list of unpaid balances.

2) Address the Legitimate Negative Credit Record

After clearing all errors, any other negative record in your credit report is legitimate, and you’ll need to remove it as well. What are the possible reasons for your FICO score drop to below 650?

• Substantial late payments; be it child support, parking fees, loans, phone bills, etc.,
• Extended overdue payments,
• Your credit history is too short,
• Few open credit accounts, say one or two.

Find a remedy for the three problems (there could be more), and your credit score will be over 650 sooner than you imagine. First, ensure that all your bills are paid on time and if you fail, make sure that you pay all overdue payments in full. That will convince the collection agency to give you a good review. Second, target to pay the bills which have been delayed for the longest time and as much as possible, pay them in full.

If necessary, you could transfer your balances from higher interest credit cards to those that offer a no interest promo period to save money. This is a good option if you’ve racked up an exceptionally high balance and can’t pay it down in a relatively short amount of time. After all, the main purpose of credit scores is to determine financial responsibility from the holder. That includes finding ways to reduce costs and increase savings.

3) Maintain Your Monthly Spending Below 50% of Your Credit Limit

Again, to achieve a 650 credit score, you’ll have to convince the credit bureaus that you control your appetite of spending against your credit limit. If your credit limit is $10,000, for example, spending $1,000 places you in a better position to have your score raised than if you spend $5,000. You can also manage such low proportions paying for up to 70% or 80% of your loans.

Raising your credit score to over 650 is not an easy task. It requires you to be committed to the mission and disciplined. Your credit record and financial position, in general, is in your hands; take charge of it by following the steps discussed. For further assistance, click here for more information concerning 650 credit scores.