6 Ways To Quickly Improve Your Credit Score
August 17, 2021
How to quickly improve my credit score?
- Stay on top of Payments
- Build Your Credit File
- Make Micropayments
- Ask for Higher Credit Limits
- Keep Your Cards Open
- Become an Authorized User
A credit score is one of the most important aspects of your financial health. At a glance, financial institutions will be able to tell how responsibly you use your credit. The higher the score, the more likely they’ll decide to loan you money or open new lines of credit for you. This can also improve borrowing rates and loan limits. Knowing how to improve your credit score is important for those seeking loans as well as favorable interest rates. Read on to find some quick tips to improve your score!
Stay on top of Payments
Your credit score is calculated based on the following metrics:
- Payment history (35%)
- Credit usage (30%)
- Age of credit accounts (15%)
- Credit mix (10%)
- New credit applications (10%)
From this list, you can see that payment history has the biggest effect on your credit score. This is why it is better to have paid-off debts on your record rather than have accounts stay for long periods. It shows that you can pay off your debts responsibly, and on time.
To improve your payment history, try to pay before twenty-nine days have passed on payment dates. When payments are made more than thirty days late, they will be reported to credit bureaus, and these reports hurt your credit score.
To stay on top of your payments, create a filing system to keep track of your monthly bills. Once that’s done, set up due-date alerts to know when payments are coming up. You can also automate your bill payments with an online banking account.
Build Your Credit File
Having credit accounts and making new applications factor into your credit score. You can’t start having a good record as a borrower until there are a few accounts to your name. Having a mix of accounts that are maintained and used regularly is helpful in this regard — just make sure you’re only opening what you can manage.
Credit-builder loans, secured cards, and rewards credit cards are easy ways to build up a credit score. These can be applied while you’re starting to apply for financial accounts. Some accounts can also be maintained without an annual fee, which reduces your expenses.
If you’re on top of your payments, consider making them in small amounts. Micropayments are useful in making credit score improvements in small increments throughout the month. This is because it shows positive credit usage by reducing your average daily balance bit by bit. This then lowers the interest you pay that balance. The lower the interest you pay per month, the better your credit usage.
Ask for Higher Credit Limits
Credit usage is one of the biggest factors of your overall credit score. Asking for higher credit limits from your card issuer can greatly lower your credit usage, which improves your score. So consider calling your card issuer to ask if you can increase the current limit on your card. This will be easier to get approved if your income has gone up, or if you’ve been consistent on your payments for some time.
Keep Your Cards Open
If you have old credit accounts you’re not currently using, don’t close them. Closing these can negatively affect your score, so be vigilant about the accounts under your name. To keep the card open, cover any unpaid credit expenses, and make sure to use it occasionally.
Keeping these cards open will also improve the age of credit portion of your score. The longer you can maintain these accounts, the older your average credit age is. Older ages are more favorable to lenders as it shows you can manage your credit accounts well.
Become an Authorized User
If a family member or your spouse has a long record of responsible credit use, and a good credit score, consider asking them for help. They can add you to their accounts as an authorized user, which can improve your credit score as you’re associated with their credit accounts.
Keep in mind that you don’t have to use their cards, and they can keep their account details private. You just need to be added to their account files for your score to be affected. This is a good option for younger users with new credit files and limited income.
If you’re struggling with a low credit score, don’t worry. There are plenty of ways to start building up a strong credit history. Having a good score is especially helpful for those planning on applying for loans in the future.
So, take the first step and learn how to improve your credit score. Having these tips in hand will help you quickly turn your financial standing around, and make noticeable improvements to your accounts. If you’re interested in more sound financial advice, get in touch with Benito Keh now! He will teach you all the basics of making good financial decisions for a better credit rating.