Ways you can increase your credit score by 100 points
A good credit score can be a key to getting a house, a better credit card with rewards, an apartment building, and generally, piece of mind that you can get a Verizon phone without worrying about getting declined.
What is a good credit score? Depends on who you ask, but many people will say 700. That’s what most companies look for when they are assessing your “credit worthiness.” So, say you are at 600 or lower. How do you get your credit score up? What are some easy hacks?
We compiled a list of basics (because we need those too!), and some more unconventional ways of increasing your credit score:
First step is getting a report.
You can get a free credit report from the three credit reporting agencies: Experian, TransUnion and Equifax. You can also use a site like Credit Karma or Credit Sesame, both of which are also free.
Okay, now that you have your report, the next step is going through all the basic things to increase your score. These are easy wins. Then, we’ve listed out some more creative ways to increase your score.
The Basics AKA what everyone tells you to do
Make Payments on Time. Your payment history is 35% of your credit score, so this is where you can repair a lot of damage by just paying consistently and on time. If you make a late payment, you can also ask the lender to remove the incident on your credit report. It’s a little more effort, but can be well worth it.
Don’t apply for too many cards at once. The frequency of new card requests affects your score negatively. This is a good one, but only makes up 10% of your credit score.
Keep balances low. You should try to use under 25% of your credit limit, this makes up 30% of your credit score. If you have points, skip the mini vacation and pay off your card. If you have a bonus pay off your card so that it gets to under 25% of the limit (e.g. if you have a card limit of $10K, pay off at least until you are only using only $2,500)
Pay off Credit Cards First. Some payments are “worth more,” to bureaus than others. If you have extra cash (maybe a bonus or tax refund) and you want to pay something off, pay off credit card debt over student loans.
Keep those old accounts open. Have a Best Buy card from 10 years ago? Keep it. Closing them reduces your available credit and lowers the length of credit history (which makes up 15% of your score!)
The Credit Hacks AKA creative ways to increase your score
Correct Errors. Did you know that 1 in 4 Americans have an error on their report (based on a 2012 survey from the FTC) This is an easy win. The first thing you want to do is correct any errors on your report. You can do this by sending a letter, and Credit Karma also has a dispute tool built in for free.
Become an authorized user. Do you have a close relative or friend that you are close to, and you know is responsible? They might be willing to put you as an authorized user, which will allow you to inherit their good credit and credit history. Make sure this friend or family member has a stable job and income, and your friend HAS TO have a good history of payments and an great balance ratio (AKA using under 25% of credit) for this to succeed.
Ask for more credit. Since your credit limit is 30% of your credit score, it’s a good idea to find creative ways for your limit to be under that 25% utilization. You can do that by 1) paying down your card or 2) asking your credit card company for a credit increase if your income has increased. This is good tactic that doesn’t require too much effort. But, you have to make sure you are disciplined and you don’t use the new credit you get.
Utilize Balance Transfers. You probably get some junk mail offering you 0% APR for 18 months. If you have a lot of debt that is at an 18% or 20% interest rate, it’s not a bad idea to get a 0% APR card, transfer the balance and put yourself on a plan to pay it off in those 18 months. One thing to keep in mind, is you should still be cognizant of the 25% utilization rule! But the goal is to stop the bleeding, and in reality, if you are paying 20% interest, it’s worth it to transfer, get a break from the accruing interest and actually start to pay it all off!
Sometimes if you have a lower score, it can feel overwhelming and insurmountable, but it’s not! Just do the easy wins first, the ones you think you can get done today, and then schedule a time a few days later to tackle the rest. Try as much as possible to put payments on autopay and write down your goals so that you stay focused on them. You got this!