How to instantly increase your credit scores with a simple plan
Most people don’t know what their credit scores are, or understand what they mean. Knowing about your scores and having information on the three bureaus is a powerful tool you need to arm yourself with!
To explain what makes up your credit score in as simple terms possible, this is how it works
Payment History 35%:
This is the largest contributing factor for your credit scores and represents your history of making payments with your creditors.
Credit Utilization: 30%
Credit utilization shows how much credit you’re actively using. One simple way to increase your scores is by keeping balances at or below 50% of your overall credit limit.
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%
Recent inquiries let you know which prospective creditors have looked into your credit. Scores can be lowered by too many inquiries.
Types of Credit In Use - 10%
Your types of credit in use lists how many accounts you have, and what kinds of accounts they are. Having too many loans can lower your scores.
Now that you know a little bit more about credit scores, here are a few things you can do in the next half hour to add some more points to your score!
Raise your limits!
Raising your credit limits is much easier than you might think. Most people don’t realize that just by simply asking for a credit limit increase, you will most likely get one. We have proven this over and over again with clients. Just call the phone number on the back of your credit cards, and tell them you are considering transferring the balance to another card with a higher limit and lower interest rate, but that you would like to keep the account if they could just raise the credit limit. In my personal experience, it has worked 100% of the time. Often they will also lower the interest rate as a bonus. Lowering the interest rate will not help your credit score, but it will sure help your finances.
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 -
Using the existing example, your credit card has a 62% credit utilization on it. You can still maximize your scores on this card. Paying $750 down will bring your balance down to 50% of the credit limit, or having $3,250 balance on a $6,500 credit limit credit card. Even if you can’t afford to pay the $750, you’re still sitting pretty because you’ve already increased your scores by having your limit raised. Keep in mind, though, if you are trying to purchase a home or a car, you can save thousands of dollars in interest on your new loan, and you can also get an even lower monthly payment, just by paying down your existing accounts. That will result in even better credit scores and the terms of your loan will be even better than before!
All of the tips listed above have shown to be effective and powerful in helping to achieve even better credit scores. One past result showed that these tips helped to increase the credit limit on 3 credit cards, and scores were boosted by 105 points!
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.
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