8 Ways To Quickly Boost Your Credit Score
Use these simple tips to help quickly raise your credit score and increase your chance of approval for future loans and credit cards.
Raising your credit score is a win-win scenario regardless of where your score stands now. If you have low to moderate credit scores, these tips could help you see a significant increase in your score. If you already have good to excellent credit, it doesnt hurt to boost your score even higher if you havent already tried these methods.
1. Understand Your Credit Utilization
Credit utilization refers to the percent of your available credit limit that you are using. For example, if your card has a $10,000 limit and you currently have $2,500 in balance then you are at a 25% credit utilization.
The rule of thumb is try to never exceed 30% credit utilization. Now that doesnt mean you cannot use your credit card for a large purchase that might exceed 30%, but try to pay down the balance below 30% before your card issuer makes their monthly report to the credit bureaus which happens when your monthly billing cycle ends. Research has found that people with the highest credit scores average less than 7% credit utilization across their cards.
2. Make Payments On Time
WOROne of the most damaging things to your credit score is late payments. In fact, a late payment can negatively impact your credit report for as much as 7 and a half years. It is critical that you make your payments on time, and if there is ever a time where you must make a payment late then make all efforts to get the account paid up as soon as possible. If your payment is late by only a short amount of time its possible to call the creditor and request that the late payment not be reported. They wont always comply, but it is worth the effort of making the call to try.LD
3. Clear Up Any Collections
If you have any old accounts in collection that show up on your credit report, investigate them immediately. Sometimes the accounts are simply mistakes and they can be cleared up and removed from your report. Other times they are accounts that you did not remember you had, but are still responsible for. If so, pay them off as soon as you can and contact the collection agency to stop reporting the account as a debt once it is paid off.
4. Increase Your Credit Limits
If you qualify for a credit limit increase, it will instantly reduce your credit utilization percent (assuming your balance stays the same). You will likely quality for a credit limit increase if your income has increased and/or your credit score has improved since the time you initially applied for your card. Once your limit is increased, resist the urge to spend more and try to keep your credit utilization percent as low as possible.
5. Piggyback On Someones Good Credit
Do you have a family member, relative, or friend with exceptional credit, a high credit limit, or a long history of on-time payments? If so then you can greatly benefit by being added as an authorized user to one of their cards. Of course this requires a significant amount of trust between yourself and the owner of the card to add your name to their account, but they dont actually need to give you a card to use in order from you to benefit from this method, so their is minimal risk to them. Just by being named as an authorized user of their card will extend their credit limit to be used in your credit utilization calculation and a history of good payments will further benefit your score.
6. Fix Errors On Your Report
Once you have your credit reports in hand, carefully examine any and all accounts that are lowering your score. Sometimes mistakes are made, such as a payment marked late when you can prove that it was actually on time. Clearing up small mistakes such as this can help increase your score. Other types of mistakes might happen when someone with the same or similar name accidentally gets their activity reported under your name. Clear up any mistakes you can find as soon as possible.
7. Report Your Rent And Utility Payments
Not every credit scoring model considers rent payments, but some do. You can use a rent reporting service to include your rent payments on your credit report. Even if it does not directly increase your score, it helps when a potential lender sees a record of on-time payments. In addition to rent, Experian Boost can also report payments to phone, utility, and other similar monthly payments from your bank account which in turn can help increase your score under certain scoring systems and also provide additional payment history to be seen by potential lenders.
8. Get A Secured Credit Card
This is a method generally used by people building credit for the first time, or those who have low to bad credit and trying to build it back up. A secured card means you put up a cash deposit to secure the card, which is held by the lender. Then you use the credit card just as you would any other card, all the same rules still apply regarding credit utilization and making on-time payments. This can help you establish a good payment history when you are just getting started.
The lower your score is, the more significant of an increase these methods will have on your credit score. However even if you have good credit, it never hurts to make it better so use all these tips to your advantage.
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