How to Add 100 Points to Your Credit Score in 30 Days
Sep 26, 2018 20:53
Your credit score, it has become increasingly important to everything you do. Applying for a job, your new employer will check your credit score, rent an apartment, your new landlord will check your credit score. You get the point your credit score is important and it is increasingly used as a proxy for how ‘worthy’ you are.
So, you need a good credit score, but how to get one? The internet is full of columns on how to achieve this. While many of these articles fall short, this one promises to help you, so here are some tips on how to add 100 points to your credit score in 30 days.
It never used to be this way, but in recent years a credit score has become sort of a proxy measurement for risk in areas where creditworthiness is not germane. Take getting a job, employers are increasingly relying on credit checks to see if anyone who handles money can be trusted with that money.
While there is some logic behind this, the reality is that not everyone with a bad credit score is likely to steal. In fact, a credit score is extremely temporary in nature and a low score at a certain time could be due to a number of factors like losing a job or even an unexpected expense which increases a person’s credit utilization.
This still doesn’t explain why credit scores have become so widely used. To understand this, you need to look back to the early 2000’s, now the credit reporting agencies started to market risk analysis products linked to credit scores.
While these reports opened new revenue streams for the reporting agencies, they also increased the importance that credit score had on one’s life. Prior to this, credit scores were primarily used for activities tied to credit such as getting a new credit card or a car loan.
However, these days a credit score is used for just about everything. In fact, if you own a small business, odds are that even your software company, like dispensary software company MJ Freeway, might want to check your personal credit score when considering your business for an enterprise contract.
How to Increase Your Score
The first thing to know about your credit score is that it is heavily reliant on what is known as credit utilization. This is the number of credit lines you are currently using as a percent of the total value of those credit lines. For people using 70 percent or more of their credit, they are likely to have low credit scores – regardless of whether they pay on time.
However, there is some good news here as a swift decrease in your credit utilization will have a big impact on your score. In fact, over a 30-day stretch, this is the single biggest move you can make.
Even if you can’t pay off the entire amount of outstanding credit, you might want to consider paying more than the minimum. Doing so will reduce the interest payments because the principal amount is lower and as such is a win-win – first by reducing your balance due and second by lower the total amount you pay.
Another trick to reducing your credit utilization is to request a credit line increase as this will also help to lower the total percent of credit you are using. Just remember that this is something you only want to do about once a year and even if your credit limit goes up, you won’t want to use your new limit as an excuse to charge more.
Instead, be strategic by keeping the new limit as a buffer. Ideally, you want your credit utilization to be below 30 percent and as such a line increase might be what helps you to get there.
Another trick is to pay all your credit cards at the beginning of the month as this could help you to reduce your balance just before credit card companies report to the credit agencies.
Beyond this, you also want to take into consideration the other items which go into your credit score. This includes your payment history, the age of your credit history (i.e. the more ‘aged’ accounts in good standing, the better), type of open credit lines, and the number of inquiries.
By the way, you probably don’t want to have several credit inquiries on your report as each one will weigh down your score. If you happen to be in the market for a new car or a house, then the trick is to pull your open credit score as this won’t count against you and then use this score during the pre-approval phase. While your lender will need to pull your credit once more before closing, pulling your own score reduces the number of times your credit history will be referenced.
Lastly, check your credit score for errors. You would be surprised how often this happens and catching something that shouldn’t be on your credit score can have a big impact.
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