A few simple techniques to increase your credit scores fast
Let me start off by saying that understanding how the three major credit bureaus arrive at your credit score is one of the most powerful pieces of knowledge you can have. Most likely this is not something that you have ever been taught. In fact, when it comes to your credit scores, the three major credit bureaus, Equifax, Experian, and Transunion, run sort of a “black box” operation.
To explain what makes up your credit score in as simple terms possible, this is how it works
Payment History - 35%
Your payment history is the biggest piece of the credit-score-puzzle. It indicates how well you’ve made payments to your creditors.
Credit Utilization 30%:
The percentage of available credit used. Keeping your account balances below 50% of the available credit limit will maximize your scores. For the purpose of this article, this is where we will find the most room to quickly increase your scores.
Credit History: 15%
Credit history indicates the length of time your credit has been open for. Newer accounts aren’t regarded as well as older accounts are.
Recent Inquiries - 10%
Your recent inquiries show any inquiry made to your credit report from a prospective creditor. Too many inquiries can cause your scores to be lowered.
Types Of Credit In Use 10%:
How many accounts and which types. Having too many loans from finance companies (Beneficial Finance, American General, etc.) can bring down your scores.
Now that we have a little knowledge under our belts, here are the 2 things you can do in the next 30 minutes to gain some points very quickly
Raising Your Limits -
It’s often easier to raise your limits than you think it might be. You might not realize that most times, all you have to do is ask that your limit be increased and your wish will be granted. Call the customer service department of your credit card company and let them know you’re looking into transfering your balance to another card with a lower interest rate and a higher credit limit and that you’d like to keep your account with them, but only if they are willing to make the concessions you are asking for. A lower interest rate might just come with your new, high credit limit! A lower interest rate won’t help your credit scores, but it will definitely help your financial situation.
For example … Let’s say you have a credit card with $5,000 as your limit and your balance is $4,000. Your card would be 80% utilized, well over the recommended percentage of 50%-or-lower. One phone call to the customer service department of your credit card company could raise your limit to $6,500. You would now be looking at a 62% credit utilization instead, which would definitely be a positive way to impact your scores.
Lower Your Balances!
Continuing from the example above, you are now 62% utilized on your credit card. This means you still have some room to further maximize your scores. If you pay $750 on this credit card, you will bring the balance down to 50% of the new credit limit ($3,250 balance on $6,500 credit limit). Now, you might be saying that you don’t have $750 to pay down your credit card. That’s ok, you could stop here, you have already increased your scores, and you can get the limit raised for all your credit card accounts. However, if you are trying to buy a home, or even a car, you can potentially save thousands in interest on your new loan and get a lower monthly payment, just by paying a little down on your current accounts. When that results in higher credit scores, you may qualify for much better loan terms.
The aforementioned tips have proven to be very powerful and effective in the past and have shown to help people achieve better credit scores. One person in particular was able to get the credit limit on 3 of his cards raised, and his scores increased by 105 points immediately.
Keep in mind that these techniques work best for those who have a good credit history, and at least 3 open, established credit accounts. For those with more challenged credit or a negative credit history, a more aggressive approach and credit repair strategies may be more appropriate.
