A good credit score means lower interest rates on your insurance premiums, credit cards, loan products, and better terms. The internet has an endless list of tips and tricks for improving your credit score. However, paying your bills promptly and using your credit cards sensibly remains the top trick to improve your credit score.
So is your credit score below average? There are many ways to boost it. Some of these tricks will provide quicker results than you thought. Here are tips and tricks from experts on how you can quickly raise your credit rating.
Credit Score Explained
A credit score is basically a numeric number that summarizes your credit history. The rating ranges between 300 and 850. A higher score is preferable because it symbolizes a consistently good credit history built through low credit use, on-time payments, and long credit history. On the other hand, a lower credit score shows that you’re a risky client because your credit history consists of overextended use of credit and late payments.
Lenders use a credit score to predict your likelihood of repaying your loans. In view of that, it is important to maintain your score above 720 to be on good terms with financial institutions and avoid anything below 630.
Customers are becoming increasingly aware of the impact of low credit scores. They’re looking for tricks to improve this number because it enhances their financial outlook. In fact, knowing your current credit rating can dramatically influence your credit behavior.
9 Tips and Tricks to Raising Your Credit Score Fast
1. Pay Your Bills on Time
The number one trick to keep your credit score above the 700 mark is promptly paying your bills. Late payments remain on your credit history for a long period. In fact, the best way of going around this is to call your creditor immediately and discuss the situation when you miss a payment beyond 30 days.
You should also make arrangements to make payments as soon as you can in order to get current as soon as possible. Every time you miss a payment, your account is marked as delinquent, which hurts your rating. You can avoid making late payments by adding a reminder and setting an automatic payment covering the minimum.
The good news is that the impact of late payments fades quickly based on the number of missed payments and days. The score will also grow as you enrich your credit history with more positive credit accounts.
2. Develop a Strategy to Manage Your Credit Card Balances
Credit utilization is a highly influential factor. Actually, it’s the second most important factor after paying on time. Credit utilization is simply the percentage of credit limit you use at any given time. Using under 30% of your credit card limit is better. In fact, consumers with high scores utilize under 7% of their limit.
The trick is to keep your credit balance low when the issuer reports to credit bureaus because they use it to determine your score. You can achieve that by keeping the balance low before the end of the billing cycle. Alternatively, you can make multiple repayments throughout the month in order to maintain your balance low. You can achieve this by adding an alert to let you know when your balance goes beyond a certain amount.
3. Check Errors in Your Report and Dispute Them
Mistakes can pull down your credit score. Therefore it’s important to check for errors and report them promptly regularly. Lenders can decline your loan application because of small mistakes such as mistyped addresses. Other mistakes include payments marked late yet you paid on time, credit activity that doesn’t belong to you, or too old negative information shouldn’t be listed anymore.
Contact your provider immediately when you spot a mistake. Such mistakes might have arisen during special circumstances like losing your job or being hospitalized. The provider should correct and add a Notice of Correction explaining this.
Checking your credit report regularly to ensure it is accurate and up to date can prevent your score from dropping unnecessarily. In fact, you’re entitled to a free report from major credit bureaus. You can use these free copies to check for mistakes and monitor your account regularly.
4. Monitor Your Credit Report for Any Fraudulent Activity
Fraudsters can collect your personal information and use them to apply for loans without you knowing it. This can continue for a long time, especially when you don’t monitor your credit file.
Aside from securing your passwords when browsing the internet, not clicking on any suspicious link, or sharing your personal details with unauthorized persons, you can protect yourself from identity fraud by monitoring your credit file. Try to identify any suspicious activity, such as new applications that you can’t recognize.
5. Increase Your Credit Limit
You should increase your credit limit if you want your credit score to improve. You can do that by opening a new card or increasing your current credit card limit. The trick is that when your overall credit limit increases, your credit utilization rate automatically drops, especially if you’re disciplined.
You can achieve that by asking your card provider to increase your credit limit and avoid maxing out each month. In other words, you should only spend what you can comfortably afford to pay off. Also, it’s good to remember that a lower credit utilization coupled with a higher credit limit can hugely impact your score.
On the other hand, your new credit card applications are factored into your credit score because the card issuer pulls your credit report. The hard inquiry about your report lowers your credit rating by a few points. Therefore, you should do good research before making several credit cards applications.
6. Retain Your Unused Credit Card Amounts
A longer story is better for your credit score. Older but unused credit card accounts are important when improving your credit score. Therefore don’t close these accounts simply because you’re not using them. So, if you must close anything, you should close newer credit card accounts instead of older ones.
Additionally, credit scoring models reward credit cardholders with long-standing, mature accounts and low credit utilization with a high score.
7. Diversify Your Accounts
A credit mix can improve your credit rating. You diversify your credit by maintaining various loans such as credit cards, auto loans, mortgages, and student loans. You can help your score by adding another type of loan, such as a personal loan, and making on-time payments.
8. Opt for Debt Consolidation
Enrolling in a debt consolidation program can help to lower your credit score. Debt consolidation is an effective solution when overwhelmed with credit card debt. Consolidation is geared towards reducing your debt’s interest rate, which translates to lower monthly payments.
However, you must support this arrangement with on-time payments in order to improve your score quickly. Indeed your goal should be to eliminate the debt that led you to this situation.
9. Build Your Credit History
Having no or little credit history doesn’t translate into a high score. Companies don’t assess your credit score when you don’t submit a loan application. However, lenders will enquire about your credit history when you apply for a credit card or loan.
Getting a new credit facility improves your credit rating, especially when you make regular payments on time. Keep your credit utilization low at all times in order to improve your credit score.
Companies view individuals with a higher credit score as a lower risk. Such customers have a higher chance of getting a loan, mortgage, or credit card approved instantly. The fact that you can maintain a good score shows that you manage your finances responsibly. This enables you to save money.
The article has given you 9 tips and tricks to boost your credit score. Paying your regular bills on time and maintaining a low credit utilization remains the best ways to grow your credit rating. You should also understand that building your score may take time.
Share the tip that you used to improve your score in the comment section.