Credit scores play an important impact on your financial situation. It’s essential to be able to qualify for mortgages and loans to get lower rates of interest for credit card. A good credit score can make you save thousands in the long run.
If you don’t have your score quite where you’d like it, there’s good news that there are proven methods to boost it.
This blog will discuss 10 methods that have been proven to increase your credit score quickly. The most effective ways to improve your credit score is to become an authorized user of someone else’s account. We’ll also explain the ways that companies such as Coast Tradelines can make that process simple, secure and reliable.
Understanding What Credit Scores Are
Before you start looking at strategies to boost your score on credit, it’s important to comprehend the meaning of credit scores and how they work.
The credit score can be described as a numerical number that reflects your creditworthiness. The score can range from 300–850. The credit scoring model calculates this score by analyzing a variety of factors in your credit history.
Let’s look at these important elements to better understand the impact they have on your credit score.
Payment History (35%)
Your payment history is the single most significant aspect that determines your score on credit. Creditors want to know if you pay your bills in time. Paying late, defaults or bankruptcy can harm your credit score. Paying your bills on time will improve the credit rating.
Amounts Due (30%)
As “the rate of credit utilization,” this metric evaluates the amount of credit limit that you’re using. A lower ratio of credit utilization will show lenders that you’re excessively dependent on credit.
Tip: Reduce your utilization to less than 30% to improve your score.
Length of Credit History (15%)
Your score is also influenced by the amount of time you have had those credit lines. A longer history of credit can improve your score. It provides lenders with greater insight into your financial habits and spending.
New Credit (10%)
A number of new credit accounts within the span of a few days can indicate financial instability. This can affect your credit score. It causes a temporary decrease in the average time of your accounts and triggers a hard inquiry on your complete credit report.
Types of Credit Used (10%)
The range of credit accounts that you manage can affect the credit rating. The lenders prefer the combination of several kinds of credit.
This includes:
- Revolving accounts (like credit cards)
- Installment accounts (auto loans, student loans, mortgages)
A broad credit portfolio lets you manage a variety of credit.
If you’ve learned the fundamentals on credit scores, it’s time to get to the next topic. We’ll now dive into the ten tested ways to improve your score on credit.
1. Pay Your Bills on Time Each and Every Time
The history of your payments is the largest portion of the FICO credit score. A single missed payment could affect your score. Making sure you pay all your bills on time is essential to maintain a solid credit score.
This includes utility bills, credit card charges, mortgages, as well as any other obligations to pay.
If you’ve failed to pay a bill, try to pay it as soon as you can. The lender will report the change to credit bureaus once you settle the issue of delinquency. Even though the missed payment may be visible in your credit file for a period of time, taking action quickly will minimize the damage over time.
Quick Solution:
- Automate payments for credit cards, utility bills, and loans
- Use budgeting apps and reminders to make sure no bill is missed
2. Reduce Your Credit Utilization Ratio
The credit usage ratio is the second-most important element of your credit score. Maintain utilization at a minimum of 30% and ideally below 10% to get the most benefit.
To determine your ratio for credit use, multiply the total credit card balances by the total credit limit.
Methods for Lowering Your Credit Utilization:
- Repay any outstanding balances
- Request a credit line increase from your card issuer
- Spread balances over multiple cards instead of maxing out one card
- Do not close credit card accounts
3. Dispute Errors on Your Credit Report
The chances of errors are higher than you’d believe. Incorrect account balances, late payments that weren’t due, or accounts that aren’t yours can drag your score down.
Examining your credit report to ensure accuracy is essential to protect your credit record. Every year, you will receive free credit reports from the three main credit bureaus: Equifax, Experian, and TransUnion.
Utilize this annual information to your advantage and check for irregularities.
