Everybody knows that your credit score can affect the interest rate on a lot of the common loans that you can get like mortgages and car loans. but what a lot of us don't realize is that your credit score can also affect your insurance rates as well in 2022.
so it is a very good idea to always make sure your credit score is as high as you can possibly get it. because what the heck you always want to get the best interest rate that you can or the lowest premiums on your insurance rates.
so today i'll go over three ways that you can quickly increase your credit score because even a tiny little bump in your credit score can mean better interest rates or just get approved on the next loan that you're trying to get.
HOW TO INCREASE YOUR CREDIT SCORE?
now i do need to clarify that none of these strategies are guaranteed to work because everybody's going to be in a different credit situation and everybody's taken on different debt and they have different spending habits.
so just be aware that these aren't guaranteed to work but as a majority they can work for most of us.
Maintain 30% Credit Score
the first thing you can do to increase your credit score and this is actually one of the best ones because it really can increase your credit score within just about 30 days and this has to do with your credit utilization. which is actually controlling about 30 of your credit score. so it's actually a big deal to be on top of this because it does carry quite a bit of weight when it comes to your credit score overall.
basically your credit utilization is just a fancy way of saying your credit usage and this has to do with how much you're spending versus how much you have available in credit.
so if you have two credit cards and they each have a five thousand dollar limit then in total you've got ten thousand dollars in available credit.
let's pretend that you spend two thousand dollars during the month combined on both of those cards well two thousand dollars compared to that ten thousand dollars available is going to be a 20 credit utilization score.
now 20 is actually a good thing because the credit agencies say that anything above 30 percent is going to hurt your score and anything below 30 is going to help your score.
so 20 percent in this case is a good thing.
so another example here would be if you have one credit card with a 10 000 limit and you end up racking up a balance of eight thousand dollars during the month then 8 000 compared to that 10 000 limit is going to be an 80 credit utilization score and that's going to be terrible.
because it's way above the 30 percent so it is going to be hurting your credit score.
now if you want to fix this so that you have a better utilization score then all you have to do is just pay down those credit card balances every month before the billing cycle ends.
because generally the way it works is that your credit card is going to report that information to the credit bureaus when your billing cycle ends.
so if it happens to end on the 15th every month then just make sure to get that balance paid down as low as you possibly can by the time the cycle ends on the 15th.
so that you can have a better chance of that utilization score going down the next time that information is given to the credit bureaus.
if you want to do the math yourself and figure out what your credit utilization score is all you have to do is just take the balances from all your credit cards and divide it by your total limits and that's how you get your credit utilization score.
so if you've got a total balance of five thousand dollars from three different credit cards and all of their limits end up being twenty thousand dollars then you just take five thousand and divide it by twenty thousand and that ends up being a twenty five percent credit score utilization rate.
which in this case is good because it's below the thirty mark.
because this information is reported every month to the credit bureaus if you do have high balances on your cards if you can get those paid down then you can seriously boost your credit score quite a bit just by following this rule alone.
Call Credit Card Company to Increase Credit
another way that you can increase your credit score and this also has to do with the utilization that we were just talking about but it's the fact that you can call up your credit card company and ask them for a credit increase.
ecause if you do get an increase then instantly you're going to have more available credit and as long as you don't spend more then your utilization score is going to go down because you have more available credit just because you asked them for an increase.
so if you have a ten thousand dollar limit on your credit card with a two thousand dollar balance and then you call up the credit card company and you get an increase that goes to twelve thousand dollars but you keep that balance at the 2000 mark well all of a sudden you're going from a 20 utilization score all the way down to about a 17 just because you got that increase.
so go ahead and give your credit card company a call and see if you can get a credit increase because the worst thing that can happen is they'll tell you no and oh well.
Pay Your Installments Loans
now the next way that you can increase your score is if you have more than three installment loans so i'm talking about auto loans motorcycles boats rvs anything like that those are going to be installment loans and if you happen to have more than three of them and you can pay one of those off then that can help raise your credit score.
because the credit bureaus they don't like to see more than three installment loans at one time so if you can get that down to a lower number below three then it can help increase your credit score.
obviously there are a lot of us out there that don't have more than three installment loans out at the same time so if you are in that position then i just wouldn't worry about this step.
but if you are in the position where you do have more than three installment loans out and you're close to paying one of them off then try doing that because it can help increase your credit score.
just a side note here but if you are in the position where you're making late payments on different loans then you definitely want to pay attention to how late those loan payments are.
because if you're more than 60 days late on a loan payment those can carry further penalties as far as hurting your credit score.
so pay attention because if you're in the 40 day mark maybe it's a good idea to get on top of that bill rather than something that's older than 60 days.
No I think you understand How to Increase Your Credit Cared Score quickly.