9 Bullet-Proof Ways To Improve Your Credit Score:
When you find yourself in a situation where lenders don’t even return your calls, then it’s probably about time to consider other fast ways to raise your credit score. FICO, which is the credit scoring system that’s mostly been used by lenders, will usually calculate scores from 300 (which is a very bad credit rating) to 850 (which is an excellent credit rating).
For example, if your credit score is below 660 (given the dividing line for bad credit), you’re probably missing out on the lowest loan interest rates, but also the best credit cards. If you want to learn more interesting information, here’s how you can address the problem as fast as possible:
Dispute credit report errors
One of the most important jobs of the three major credit bureaus, meaning Equifax, Experian, and TransUnion, is to gather a list of monthly credit reports that also include data on your debt repayments.
All these bureaus will use the data to assign you a credit score. Of course, your score might differ if your credit file has inaccurate information, like indications of late payment, even if you paid on time, hard inquiries you never authorized, accounts that weren’t opened by you, loan balances that are too big, or any other activity that doesn’t seem familiar to you.
Sometimes, finding mistakes in your credit file might improve your credit score rebound. You will easily correct all the misinformation if you challenge your creditors to validate the information or by submitting disputes with the bureaus.
Hire a credit repair company
You can easily correct a credit report yourself, as many consumers can hire a credit repair agency to do the work for them. Such credit repair agencies will usually lodge a specific number of challenges every month.
The goal is to have a bureau, a lender, or even a merchant that validates or removes any disputed data. Among the top credit repair agencies, you will find Lexington Law, CreditRepair.com, and Sky Blue Credit Repair.
Credit repair companies operate on a monthly subscription basis, working for a range of six months, even if you can cancel at any time. We have discovered that the agencies we evaluate charge reasonable fees for their work.
Pay your bills every month
If you fail to pay your bills on time, then this is the fastest way to ruin your entire credit history, as 35% of your FICO credit score comes from your payment history. The wide majority of creditors report a late payment that’s 90 or over past due.
And once they reported, your credit score might lose 100 points or maybe more. But if you simply can’t remember to pay them, you can set up a system of automatic payments to take care of it. You should also consider using personal finance software that is programmed to remind you of any upcoming bills or even initiate repayments.
Pay off debt
The other 30% of your FICO credit score comes from how much debt you owe. Your score will definitely suffer if you’re currently using debt until you get financially overextended.
Some of the most important warning signs might include big amounts owed on all accounts, as well as high outstanding debt (which doesn’t include a secured loan) that can be compared to the original installment loan amount, or other credit cards with unpaid balances.
You can easily improve your credit score just by paying off existing debt. You can make a list of debts, but also prioritize repayments by interest rate. Redraw your budget (assuming that you have one), so you can tighten up on spending and consider various ways to bring extra money.
Maintain your credit utilization ratio below 30%
Probably one of the most important metrics you can use for judging the impact of your credit card debt is known as the credit utilization ratio, or credit utilization rate, which is the amount of credit you used versus the credit line authorized.
The importance of CUR relies on the fact that it’s impossible to judge creditworthiness by the total amount of money in your credit card balances. Creditors would rather contextualize the total amount by comparing it to the sum of all your credit card limits.
As a general rule, creditors want to see CURs below 30%. You can easily improve your score faster by getting the CURs below 30%. If you want to do it even faster, you can try to get it below 10%.
Open a new credit account
To a certain extent, you can easily raise your credit score by opening a brand new opening new credit account, whether it’s a new credit card account, a personal loan, an auto loan, an installment loan, or refinancing a student loan. While it could be helpful, only in small doses:
- CUR reduction – if you decide on getting a new revolving credit card account, the CUR denominator instantly increases. If you want this to have the desired effect, you should try to avoid carrying a balance on the new credit card, which would instantly offset the gain.
- Increase credit mix – As much as 10% of your FICO score stems from a mix of different credit types: auto loans, credit cards, mortgages, online loans, retail accounts, and even finance company accounts. FICO translates that you are creditworthy, as you can easily juggle multiple account types.
Request a credit limit increase
You can easily increase the denominator of your CUR, hence lowering the ratio’s value, by focusing on the increase in your available credit. You can easily do this without opening another account if you already have one or multiple credit cards.
The majority of credit card companies will consider evaluating a request for a higher credit limit, but you might have to provide extensive financial information so you can back the request.
The credit card company might ask for bank statements and tax returns before granting you a higher limit. It is recommended to expect the creditor to do a hard pull of your credit, which might reduce the positive impact of the higher limit, at least for a while.
Use Experian boost
From a historical point of view, the card issuer and credit reporting agency industry might define what types of bill payments it could track in its credit reports. Before Experian Boost, it was out of the question for your FICO score to be affected by your on-time payments or utility company.
Experian Boost changed everything. First, it made more space for the scope of tracked bill payments to include some utility-type accounts, such as the ones for your mobile phone, rent, electricity, internet, and even cable.
By paying these newly tracked accounts right on time, you can add positive ammunition to your struggles to improve your credit score.
Become an authorized user
In case you’re having trouble getting a credit card, you can ask a friend or relative to make you an authorized user on their card, which will allow you to get credit for payments that were made by you or the card owner.
Your credit report and score can easily benefit long term, just as long as the card owner starts making timely payments and sticks within the credit card spending limit. You should start looking for any agreements you could reach with the card owner, in case you put the relationship at risk.
If this is not possible, it would be better to go for a secured credit card. Now, if you feel like you haven’t learned enough, you would probably benefit from reading How to Build Credit: How to Improve Your Credit Score & Rebuild Credit (Financial Stability Series). Trust me, it’s worth it!
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