Your credit score will determine if you will get approved for credit cards, car loans, home mortgages or even if you get a job or not. At one time it was possible to operate only with cash. But increasingly, everyday things depend on your credit history. If you are not satisfied with your credit score today, do not worry: there are some simple ways to improve it quickly. Once your credit score improves, you can enjoy benefits such as lower interest rates and insurance.
Keep in mind that while these tips will help you increase your credit score quickly, be patient and remember that it can still take 30-60 days to see any noticeable improvement.
Credit Utilization Rate
Your credit utilization rate represents 30% of your credit score. It is the number that shows how much debt you have compared to your total available credit. The more unused credit you have available, the lower your relationship.
For example, if the credit limit on all your cards is $ 10,000, but you owe $ 8,000, your credit utilization rate is 80%. You are using 80% of your credit.
That’s pretty high – a rate of 30% or less is ideal. There are three main ways to reduce your credit utilization rate.
1. Pay your Debt
Using the previous scenario, if you can pay your debt from $ 8,000 to $ 5,000, then your rate is reduced to 50%. Once your debt goes down, your score will see a significant boost quickly.
2. Request an Increase in the Credit Limit
If you are not able to come up with some money to pay off your debt quickly, try to get an increase in your limit from your credit card issuer.
If instead of having $ 10,000 in available credit, you have $ 15,000, your ratio would fall to 53% with a debt of $ 8,000.
Keep in mind, however, that you will usually only grant this if you have had a good record with them during the past year. If you have not received payments, you may not be able to get the increase.
3. Apply for a new credit card
If you have a lot of credit card debt, getting another credit card may not be the wisest thing to do. But if you need to increase your credit score quickly, this may be your only option.
If you can, try to get a card with a 0% intro balance transfer option, which will allow you to transfer your existing debt and at least get a break from paying interest each month.
If you can not get approved for credit cards due to your low score, get a secured credit card, which even those with bad credit can be approved.
The length of your credit history represents 15% of your score. If your score is low because you are new to the credit, then you just have to be patient. But you can accumulate your credit by opening accounts now and keep them in good standing in the future.
4. Keep the cards open
You should not close any existing accounts, as each one continues to contribute to your credit history. In fact, many people have the mistaken belief that closing credit card accounts will help your credit score, when it is likely to have the opposite effect. The longer you have your accounts, the more
will add your score. Even if you no longer use your old credit cards, you can cut the cards or block them, but do not override them.
5. Become an Authorized User
If you have problems getting approval for new accounts, see if you can become an authorized user on someone else’s card. But be sure to sign with someone who is a responsible user. Your score can decrease drastically if that person is not responsible for your payments or has too much debt on that card, too.
Types of Credit
The types of credit in use also represent 10% of your credit score. These formulas favor those who have various types of loans, including mortgage loans, car loans, student loans, credit cards and store credit cards.
6. Mix your forms of credit
While you should not borrow money for a house or a car just to try to improve your score, it’s worth bearing in mind that even opening a store credit card and using it for some small purchases can help improve Your credit score slightly.
You can also consider opening a specialized card such as a branded gas card (which only works for gas station payments). This will help you resist the urge to spend on other things and to accumulate rewards in no time, such as free gas.
Pay the balance immediately after each use and your credit score will reflect your good credit history, payment history and available credit increase.
Your payment history is the highest percentage of your score – 35%. Do not avoid the importance of paying your bills on time.
7. Configure alerts and automatic payment
Sometimes payments are lost simply because the bill was forgotten or lost. These small mistakes add up to your credit score. If you have trouble remembering to pay your bills, set up automatic payments or create reminder notices on your calendar. There are no excuses!
To maintain a good score, you must be diligent about supervising your credit, too. Check your credit report every year at AnnualCreditReport.com or to make sure there are no errors. If you notice a discrepancy, act quickly.
Your credit score may be unjustifiably low and you may simply have to make a call to correct any problems. In fact, studies have shown that up to 80% of consumer credit reports have an error, which can be costing up to 50 credit points.