Almost 40 percent of people have no clue how their credit score is determined.
With a good credit score being necessary to buy a house, rent an apartment, get a car, and more, everyone needs to know what goes into determining the credit score and how to improve their score fast.
Are you wondering how you can improve credit scores quickly? Are you tired of the gimmicky ways to boost your score?
If you are looking for the best, real-world ways to help you finally get a good credit score, keep on reading.
Here are 5 of the top tips you need to know on how to improve your credit score.
1. Make Multiple Monthly Payments to Your Debts
Most people like to pay their monthly bills all at one time in order to keep everything organized. But if you want the first easy tip for improving your credit score, start doubling up on those credit card or loan payments.
If you make even just two payments to loans or debt a month, the credit reporting systems will see that you are using “less” of your credit. This is thanks to you keeping the balance low just by making more frequent payments.
The best way to schedule out these double payments is to pay the first installment two weeks before your statement period closes. Then, pay the second payment about 5 days before the statement closes.
If you do this over time, you will see your score raise several points every few months.
2. Never Miss a Loan or Credit Card Payment
The most tried and true tip for raising your credit score is never missing a payment. Even if you miss just one payment or are simply just late for paying it, it could drop your credit score by up to 100 points.
If you have trouble remembering when different bills are due, write them all down on a piece of paper and leave it at your desk or another place where you frequent daily.
But the best way to remember bill payments is by not having to remember them at all! Set up automated payments so you don’t ever have to worry about missing a single payment.
3. Make Your Rent Payments Contribute to Your Credit Score
Almost 40 percent of people rent instead of own. That number is only expected to increase as the cost of owning a home continues to skyrocket.
However, rent payments usually do not go toward your credit score at all. Renters are missing out on a huge chunk of money that could be helping their score, especially when most rent payments are between 30 and 40 percent of an individual’s take-home pay.
But it doesn’t have to always be this way.
If you want your rent payments to go toward improving your credit score, look for landlords that utilize tenant credit reporting. More and more landlords are implementing this strategy.
Tenants are more likely to pay on time simply because the payments are going toward boosting their credit score. It is a win-win for everyone involved.
4. Ask For a Credit Limit Increase
Another way to instantly boost your credit score is to ask for a credit increase. Raising your credit limit while staying within your typical spending range will make it look like you are using less credit.
A common reason why most people get credit increases includes a bump in their annual salary. Some credit companies will want to increase customer loyalty and retention and increase the limit for those with reliable credit.
If you want to get a credit limit, be sure to ask the credit card company to do a soft inquiry, rather than a hard one. A soft inquiry won’t negatively impact your score like a hard inquiry does because it doesn’t pull your credit report.
5. Be Wary About Old Credit
This tip for raising your credit rating is two-fold. You want to be wary about closing out old credit cards. Even if you no longer use that card, you should think twice about closing the card permanently.
Here is why. Say you had four credit cards open and each one had a limit of $5,000. Your total credit limit is then $20,000. If you only use $5,000 total credit each month, your credit utilization is less than the coveted 30 percent.
But now, if you go to close an old credit card that you are not using anymore, your credit limit now becomes $15,000. Even if you don’t spend any extra money, it looks like you are using up more of your credit allowance. Credit reporters do not like this and this could cause your credit score to decrease.
Secondly, you want to take care of and eliminate any delinquencies you may have on your credit reports. Any lingering debt that has gone to collections is continually dragging down your score with each passing day. Work hard to get rid of those quickly.
Looking for More Ways to Improve Credit Scores Fast?
If you are looking for tried and true ways to improve credit scores, you are not alone. A majority of people want to boost their credit scores without buying into subscriptions or purchasing credit boosters.
If you practice the tips mentioned above consistently and do not overspend, you will definitely start to see a major improvement in your credit score.
Are you still looking for additional ways to boost your credit score? Be sure to follow along for more articles that cover all the latest on financial tips and budgeting tricks.