Are you a fan of using credit cards to buy new clothes, get those new hot shoes in trend, or simply paying off your bills? If yes, then most likely, you’ll want to instantly boost your credit score to remain active and get all the benefits you think you deserve.
There’s nothing wrong with aiming high for your credit score. In fact, it is still realistic in this time of uncertainty of the current worldwide condition. For this reason, we listed out the 5 ways to instantly boost your credit score, without sweating.
But first, let us discover what really is a credit score, and how banks or lenders are calculating an amount of balance they’re going to let you spend.
What is a Credit Score?
Back in school, your report slips would largely affect how people would think of you in terms of studying or as a student in general. Likewise, adults do have the same thing in terms of credit score.
Banks are going to determine if they are going to accept your application for loan or credit card issuance and up to how much interest rate they are gonna be charging you for.
The banks are going to check your FICO Score to make a decision if you’re a worthy borrower or not. The numbers range from 300 to 850, making 670 as average while 800 (and above) as exceptional payers.
The higher the score you have, the better position you have in the bank, the lower the risk they may face, and the lower the interest are you going to pay. If you have a FICO score below 680, banks are either going to charge you so much money as interest or they’re going to completely reject you.
But thankfully, there is a solution to instantly boost your credit score. Over 100%, take a look at the factors that you’re going to consider in order to calculate your Credit Score:
-35% for On-Time Payments – if you always pay your bills on time as agreed between you and the lender without being late or missing any date of payment.
-30% Credit Utilization – the calculation between how much credit is available to you vs how much you’ve already used.
-15% Age of Credit – the longer your account is open, the higher chances you’ll receive a high credit score.
-10% Types of Credit – lenders may want to see your loan history just to see that you’re financially a responsible adult who knows how to handle different debts such as lease payments, credit cards, auto payments, etc.
-10% Hard Inquiries – if you keep on asking and applying for a credit lineup, it’s going to show in your report which may lower it.
Now that you’ve learned calculations used by banks (or lenders), here are the methods that you can use to instantly boost your Credit Score:
View Your Credit Report
Try to scan your spending activities and look through which items or movement can be improved. You may ask your lender for a specific copy of the report, check your account on their website, if available, or use a personal finance website like creditkarma.com or annualcredireport.com to examine your credit history.
Typically, some of these items or movements are usually:
-Not enough credit history.
-Late Payments.
-Accounts in Collections.
-High Balances.
-Bankruptcies, Inaccuracies, and Foreclosures.
The best way to solve these items is to ask someone with a high credit score to assign you as one of their authorized users so you can get the same benefits they receive. This solution is also referred to as “piggybacking” because obviously, you’re not doing all the work.
It is the best recommendation for parents who want to give their children a financial headstart without having to use their physical card.
High Utilization
As much as possible, try to avoid maxing out your credit balance or spending close to its maximum value because it can negatively affect your credit score. Instead, pay down your balances in full or maintain a low amount of spending.
If you think that’s quite a tough job for you to control (which is probably not that hard), you can ask the lenders to increase your total credit limit. If they won’t agree, resort to the second option which is getting multiple more credit cards, and paying them all on time.
This way, you can spend a small percentage on each credit card rather than spending 100% balance off from a single card.
Experian Boost
Isn’t it that banks or credit card lenders calculate your credit score through your account history, the times you make an on-time payment, and the types of loans you’ve been given too?
See here’s the thing, there’s this new credit scoring model called Experian Boost that aims to improve your FICO score by monitoring your phone and utility payments and adding them as a positive trade link on your Experian credit file.
This means that anyone who’s a member of Experian Boost can now easily apply for a credit card since they are tracking your phone and utility bills as well, which of course is one of the topmost priorities that you should regularly pay.
Remove Late Payments or Delinquencies on Your Account
Late payments are big monsters for your credit scores. So if you did, at once, had your payment delayed, not all hope is lost. It’s better to pay off the overdue balance than prolonging the imposed problem.
Try to negotiate the terms of the agreement, if possible. If you have difficulty in paying, try to negotiate the terms of debt, if possible, You can pay something upfront just to bring your account back to its current state. Even if that means you’re only paying the minimum amount, it’s still much better than not paying at all.
And if you’ve already paid off the debt and the late payment is still in your report, see if you can discuss and ask the lender if they can remove it as a courtesy. They are not obligated to do this, but you can always try.
Don’t Close Any of Your Old Accounts
Haven’t used your firsts credit cards for the past several months or even a few years now?
Avoid closing these hidden gems since it can still provide you with a better history than getting new useful cards. If you did, then the banks or the lenders are gonna act as if you’re just new to this credit card game, and your credit score is going to drop – big time!
You might be worried about that annual fee that you have to pay even though you’re not even using it anymore. Just always keep it open, and every now and then, charge at least $1 for an Amazon gift card just so it can remain active. You can also try to call the credit company, and see if they can downgrade your charge to its free option so there’s no need for you to pay an annual fee.
All of these methods that can help to instantly boost your credit score are something you can do to yourself for free, under an hour, without the help of any third-party people or company that asks for payments.
Remember, there’s always gonna be a solution in every aspect of life. If you’re a newbie in the field of credit cards, make sure to follow all these methods, and get that high credit score you deserve!
