Boost your credit score
Most people don’t think about their credit score until it’s too late. Your credit score dictates almost everything from whether you will be approved for a credit card to the rate you are offered on a mortgage. Today many employers use credit scores to determine whether you are fit for certain positions.Out of desperation, people end up seeking the services of a credit repair agency, which can become a costly mistake. Having bad credit can affect many things; credit scores affect not only how much money you can borrow, but also things such as your ability to purchase certain items and the price of insurance premiums. Insurers think that people with high credit scores are less risky, more responsible and a better investment. Get more affordable premiums and give yourself more borrowing options by raising your score. With a little effort you can make some changes that will raise your credit score fast.
#1: Pay down your credit cards
The biggest thing that can impact your credit score, after bankruptcies and foreclosures, is past due credit accounts. So, paying off your debts as quickly as possible will make a huge impact on your credit score. If you are unable to completely pay off your credit card debts, luckily there are some strategies you can implement to start making progress. Paying off some of the debt and shifting the rest of it around will help your credit score go up.
Strategy A: Pay off the highest interest cards first
The high interest cards are the ones that cost you most in the long run since interest payments can financially ruin you by themselves. If you have one card at 25% and another at 15%, you make only your minimum payments on the 15% card and put all your resources into eliminating that 25% one as soon as possible.
This is probably the best long-term financial strategy if you consider debt in a vacuum, but raising your credit score in and of itself gives you several opportunities to become financially stronger, which could give you a better chance of getting out of debt more quickly.
Strategy B: Pay off the cards closest to their limits
This strategy is designed to provide an immediate boost to credit scores. As you get closer and closer to your credit limit on a card, your score drops lower and lower. The idea, then, is to start with a card approaching the limit or at the limit and pay that one down until it is beneath the amount owed on another card.
For example, if one card has a $3000 and you owe $2800, start paying that one before you pay the one that owes $500 on a limit of $2000. Essentially, you are just prioritizing the ones that are close to the limit.
Once you get a card comfortably beneath its limit, then move on to another card.
Keep in mind that even reducing your balance to one-third of your credit limit will increase your credit score significantly.
#2: Continue Using Older Cards
A good credit score is about a well established history. So, the longer you use a card, the higher your score will be. Use your oldest card for purchases and then pay it off before you have to pay interest. Even doing this for $100 a month will add ten or so points onto your score in no time.
#3: Avoid Heavy Spending
Even if you pay it off very quickly, filling up a large chunk of your credit card limit will really hurt your score.
Charge lightly, not heavily.
Credit bureaus look at your monthly spending, so even if you pay it off, they see how high or initial balance is and will hit you right where it hurts: your credit score.
#4: Correct credit report errors
Credit scores are mainly determined by your credit report. Credit reports contains data that is used to calculate the score and it may sometimes contain inaccuracies. A recent report proved that there were inaccuracies found in the credit reports of 40 million Americans, which can create huge problems for loan applicants. If you have not, request a copy of your credit report to insure there are no late payments listed incorrectly and the amounts owed for every account are correct. If you find any errors, dispute them with the credit bureau. If you clear up mistakes from your credit report, it can lead to a huge boost in your credit score.
#5: Pay your bills on time
Making your bill payments on time is one of the major contributing factors to your credit score. Some lenders offer payment reminders by sending text messages or emails when the payment is due. You can also enroll in automatic bill pay where payments are automatically debited from your bank account.
#6: Pay your bills twice a month
You may think that paying your card every month even if it is maxed out is a good thing. The problem with this is that lenders only report balanced to the credit bureau once a month. Therefore, if you run up a big balance, it will look like you are overusing your credit.
To alleviate this problem, make one payment before the closing date and the second before the due date. The first reduces the balance that the credit bureaus see and the second ensure that you do not pay a late fee.
#7: Increase your credit limit
Increasing your credit limit can make a drastic changes in your credit score. After all, a credit score is just a formula used to figure out your credit paying capabilities. One of the parameters is your credit utilization percentage. For example, if you have a credit limit of $10,000, but only use $5,000 a month, then your credit utilization percentage is 50%. If you ask for an increase in your credit limit and get it increased to $20,000, while still only using $5000 a month, your credit utilization percentage will be 25%.
Improving your credit utilization rate will definitely help your credit score. Call the creditor and request a credit limit increase. However, if you get a limit increase, make sure you don’t spend any of the new credit, or it won’t help your score at all.
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