Great Tips for Better Credit
6 Quick ways to Raise your Credit Score
These are all great ways to increase your credit scores which will benefit you in all kinds of ways, from determining what rates you’ll be charged when borrowing money to what you’ll pay for your insurance.
Many of the rules that determine what your credit scores are can be confusing and some even work in a contrary fashion to what you would expect. That’s why it’s critical to know how to best maneuver the system so that the things you do work to YOUR benefit.
- Check your own credit report
Before you begin searching for a home or anything else where you may be needing credit, get a copy of your own credit report and look it over thoroughly. There are many different sites online, but you want to be sure and request a Tri-Merge Report.
That’s short for Triple Merge, and it means a report that gives you a consolidated report including all three of the major credit reporting agencies. They don’t all report the same, and you’ll notice some items may be reported by one agency, but not others. This is especially critical in checking on derogatory accounts or collections.
- Pay down your Existing Balances
If your credit cards are maxed out, or near the maximum utilization rate, it will hurt your credit scores. To stay in the best possible shape, it will benefit you to pay down some of those balances to where you owe no more than 30% of the high credit allowed on that account. To help improve your credit scores, that’s one of the fastest ways to do it. And don’t attack the smallest ones first, because those aren’t the ones that are hurting you. The ones with the highest minimum monthly payment will have the biggest impact, not only on your credit scores but on your debt to income ratio. This is super important when trying to get a home loan.
- Increase your credit limits
One of the best ways there is to increase your scores without spending a penny to do it is by increasing your credit limits on the major credit cards that you have. This is especially beneficial if you do it on the cards where you’re already close to the high credit limit. Simply call the credit card company, and let them know you have some expenses coming up (isn’t that always the case?), and let them know you either need to get a different card with a higher limit and cancel theirs, OR before you do that, ask them if they could raise the limit on the one you have with them? Remember, the last thing they want you to do is to cancel their card, so in almost every case this will work. And the higher the credit limit compared to what you owe, the more favorable the credit scores will be. This is only for a major credit card, it will not work with store credit cards. Unfortunately store cards don’t help your credit score, but if you have them, DO NOT CLOSE THEM, ever. Closing accounts will HURT your credit score.
- Open a new account
If your credit card issuer is not willing to increase your credit limit, then apply for a different card, through a different institution. And whenever you’re looking for a new card, always look for one with the highest limit you can get approved for. Remember, it has nothing to do with spending more, it’s about having more accessible credit that you are NOT accessing. It gives the appearance of a more disciplined borrower, and lenders and other credit grantors always like to see that, and so do the credit modules that determine your credit scores.
5. Pay twice a month
When you have a balance on a credit card, as soon as you charge something else and add to that balance, the credit card company is now charging you more interest, because now you owe them more. One way to cut this way back is to make two payments per month to the credit card company, rather than wait and make one payment per month. Since that will reduce your daily balance, it also reduces the interest they can charge you. This is one way of beating them at their own game, so to speak. The more of this you do, the farther ahead you’ll get.
- Become an Authorized User
If for any reason you are not in a position or not able to get your own credit card at the moment, if you can become an authorized user on the account of your spouse, parent or significant other, that will help you gain traction towards getting your credit scores up. You don’t even have to have a card or actually use their card, but by being connected like that to someone who has a great credit record, you can benefit from that and therefore start on the way to earning your own great credit. Once a credit grantor sees that you have an account, even if you’re just an authorized user, they’ll be more inclined to open an account for you, eventually eliminating the need to be an authorized user forever.
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