There are plenty of things you can do to improve your credit score – here are some tips.
Pay credit card balances strategically
Credit utilization is the portion of the credit limit that you are using at any given time. A good guideline you can use is using less than 30% of your limit on any card. The lower you can go, the better. People with the best scores use less than 7%. You can easily this information by looking at your credit score profile.
Try making sure the balance is low when the card is reported to the credit bureaus by the card issuer because it is going to be used to calculate your score. A good way of doing this is paying down the balance before the end of the billing cycle or paying many times throughout the month to make sure the balance remains low.
Impact: This is going to be highly influential. Credit utilization is the second-biggest factor used when determining your clearscore credit check. The first one is paying on time.
Time commitment: This is going to take low to medium. You need to have calendar reminders so you can log in and then make payments. It is also possible to add alerts to credit card accounts that are going to let you know when a balance hits your account.
How fast does it work: When there is a lower balance reported to the credit bureau, the lower utilization is going to be used to calculate the score.
Asking for higher credit limits
If your balance remains the same as your credit limit goes up, it means that your credit utilization instantly lowers, which is good for your credit. If you have added more years of positive credit experience or your income has gone up, you have a good chance of improving your limit.
Impact: This is highly influential because credit utilization is an important factor when determining credit scores.
Time commitment: Low. You can reach out about the credit card issues and then ask for a high limit. You need to know about a “hard” credit inquiry, which can lead to the dropping of your score temporarily.
How fast is it going to work: Once you have the higher limit and they are reported, your overall credit utilization is going to come down – provided you don’t use the new ‘room’ on your card.
Becoming an authorized user
If you have a friend or relative who has a credit card account that has a high limit and a good history of paying on time, then consider asking them to add you as an authorized user. The account is going to be added to your credit reports, which is going to help with credit utilization. This is known as “credit piggybacking,” being an authorized user status means you benefit from another person’s payment history. They don’t even have to allow you to use that card or even the account number. Your credit is going to improve.
It is important to ensure that the account reports to the major bureaus (Experian, Equifax, and TransUnion) to get the most out of it.
Impact: Potentially high, especially for those who are credit newbies or have a thin credit file. The impact is not that nig for people who have established credit interested in offsetting their missteps or lowering credit utilization.
Time commitment: Low to medium. Make sure you speak with the account holder so you can agree on if you can just be listed as an authorized user or have access to the card.
How fast could this work? Once the account is reported to the bureaus after the account is added, you are going to see some results.
Paying bills on time
There is no strategy that is going to help with your credit if you pay late. Late payments are bad for your credit because they can remain on the report for seven and a half years.
If you happen to miss your payments by 30 days or more, then make an effort of calling the creditor as soon as possible. Pay it as soon as you can so that the creditor can consider not reporting it. It is worth getting current on your account even if the creditor won’t do that. With every month, your score gets worse when an account is marked delinquent.
Impact: Highly influential. One of the most significant factors when determining credit is paying bills on time.
Time commitment: Low: Set your account reminders to avoid missed payments. You can also set up automatic payments.
How fast can it work? This is going to vary because it depends on the number of payments you have missed. It also matters how late these payments are. The good thing is the impact delinquent payments are going to fade with time. When you add more positive credit accounts, it speeds things up.
Disputing credit report errors
Your credit might be down because of a mistake on the credit report. You can improve your credit by disputing credit report errors.
You are entitled to a free report from each of the three main bureaus. Request your report using AnnualCreditReport.com then see if there are any mistakes like someone’s credit activity mixed up with yours, payments marked late but you paid on time, or negative information that shouldn’t be listed anymore because it is too old
Once you have identified the errors, dispute them.
Impact. It varies, but it is going to be high if there is an error that says you missed a payment when that is not the case.
Time commitment: Medium to high. You have to spend some time requesting and going through your credit reports. It is also going to take time to dispute the errors because you have to track the follow-up. This is going to be worth it, especially if you are trying to improve your credit to apply for a large loan. Make sure you deal with the dispute before applying for a mortgage.
How fast can this work? The bureaus are given 30 days where they have to investigate the dispute and then respond. There are companies out there claiming they can help with errors quickly, but be cautious when dealing with them.