How to improve your credit score!
Having a good credit score isn’t just for getting into debt. It’s also for gaming the system so that you can make even more money. I can help you make money off banks and credit cards, not have them make money off your debt and interest. First though, you need to get your credit game together! Follow these hints below to improve your credit score.
Check your credit score often
It’s vital you keep an eye on your credit. You can control what you track. It’s also vital should fraud come about on your credit report. Hackers and scammers have hit people for years before they found out, and by that point it was too late. Stay on top of it weekly. Check your credit scores weekly when you check your credit and banking accounts. CreditKarma.com & Wallethub.com are great resources. Wallethub gives you free daily updates. CreditKarma gives you free weekly updates. Many users also like to use Mint.com for a more holistic approach including tracking checking and savings accounts, other personal wealth and investments, bills and budgets, as well as your credit reports and scores.
Good payment history – Pay your bills on time/minimum payments
This is the single largest factor of your credit score, whether you have on-time payments or not. I recommend paying off all your credit card debt every month, and to make sure that all debts are paid on time. Having late or no payments on your credit score is the quickest way to destroying your credit score. Even if you can’t pay off your debt in-full every month, make sure you at least pay the minimum payment. The best way to make sure you always pay off your debts is to automate your credit card payments. Linking up your credit card payment system with your checking account makes it so you will never record a late payment. I recommend organizing all of your accounts into a browser bookmark and checking all the accounts once a week. It doesn’t take long to sign-in and check your accounts and there’s no excuse not to do so. Make payments that are due before the due date to make sure your payments are always on-time.
Low Credit Utilization Ratio – Pay-off Debt/Low Debt-to-Limit Ratio
One of the most important things you can do is to pay off your debt. Your debt-to-credit limit ratio is one of the largest factors in determining your credit score. Try to keep your total debt below 30% of your credit limit. It’s ideal to keep it below 10%. IMO you’ll always be sitting pretty if you pay off all your credit cards debts each month, even when considering the myth that your credit score goes slightly down when not using credit. If you have a balance on your card, even if you pay it off every month, it will still show a balance on your credit report for that month. If you stay under 30% you’ll be alright. If you stay under 10% you are in the sweet spot of the bat. Pay off your debts with the highest interest rates first. Also, find 0% or low-interest balance transfer offers if you’re struggling to pay down high-interest cards to keep from compounding interest that’s against you.
Long Credit History – Start young
If you’re young to this game, you’ll benefit from starting NOW! Don’t procrastinate. Do what you have to do, this week, to start building credit. The longer you have your accounts open and in good standing, the better your credit score gets.
Low number of hard credit inqueries
This factor does play a role, but a much smaller role relative to the factors above. Applying for new credit places a hard inquiry on your credit report. The more hard inquiries, the lower your credit score goes, to a point. Once again, it’s not that strong of a factor, but it does play a small role. Contrary to popular folklore, checking your credit score doesn’t count as a hard inquiry, so like I’ve said before in this article, check your credit regularly, just make sure you aren’t applying for any and every account under the sun. This will make it harder to play the “make-money-off credit-institution” game I can help you with in my other articles.
Request a higher credit limit on your active credit cards
A great way to lower your debt-to-credit limit ratio isn’t to just pay off debt (which is usually the best bet, although not the only option) it’s to also get higher credit limits. If you’ve only had a credit card for a few months, it’s best to wait until at least the 6-month mark before you request a higher credit limit. If you are on-time with your payments, and you are following the steps above, your credit card company should be willing to assist you with an increase after you’ve held their card in good standing, if not 6-months, at least after 1 year.
Dispute errors in your credit reports
If you see something that you KNOW is incorrect, dispute it. Fight any fraudulent transaction but use caution. You could land a lawsuit against you if you claim fraud when it isn’t fraud. Ironic enough, that’s fraud in and of itself.
Become an authorized user for someone with good credit
I’ve done this for numerous people. There are friends of mine that had bad credit, who turned to me for advice, and I put them as an authorized user on my account. These people never got a physical credit card, they’ve never made a transaction on my accounts, I simply put their name as an authorized user and cut-up the credit card in their name when it got to my house. One guy I helped had his credit score go up over 100 points in less than 1 year just because he had never had any credit, and with my help my credit card companies started reporting to his reports that he pays on time each and every month.
How to build credit – Get a secured credit card if you can’t get an unsecured card
Some people won’t be able to get accepted for even the most basic unsecured credit cards. There are secured credit card options for these people and great options they are! You will have to put down a deposit, from a few hundreds dollars up to thousands, but you’ll get a credit card that begins reporting to the credit agencies each and every month just like a regular credit card. Don’t get a cash card, don’t use your debit card…. these options won’t work. You will need an actual secured credit card option for them to report to the credit agencies.
Have patience
It takes time to improve your credit if you have messed it up, but it’s possible to get a quick rebound if you follow these tips. Although bad marks on your credit reports can last for up to 7 years, their harmful deductions are pro-rated meaning that as time passes, even if they are on your report, their value will be greatly reduced as each month passes. A negative mark from 6 years ago isn’t nearly as harmful as a negative mark within the past year. Building your credit is like getting into and staying in shape, it’s all about consistency and following best practices that I’ve outlined above.
How to make money off good credit
Now that you’re on your way to better credit, you can make money off the system! Follow this advice to bring in thousands and thousands of dollars each year.