5 Tips To Raise Your Credit Score Quickly
1. Pay credit card balances down to less than 30% of the limit.
Credit utilization reflects how much of your available credit you are currently using. To have a good credit history, you need to keep your credit utilization below 30% of your available credit. For example, say you have three open lines of credit
- You owe $800 with a $2,000 limit
- You owe $1,000 with a $2,000 limit
- You owe $3,000 with a $4,000 limit
Your total debt would be $4,800, divided by the total limit of $8,000. In this case, your credit utilization ratio will be 60%, which means it is 30% over the recommended ratio; at this point, the recommendation is to pay the lines of credit down as quickly as possible. That way, those high balances have less chance of lowering your credit score.
2. Ask for higher credit limits so your balance is less than 30% of the limit.
Asking for a higher credit limit can improve your credit utilization ratio, which can help your credit score in the long run. Five factors help your FICO credit score: payment history (35%), accounts owed (30%), length of credit score history (15%), new credit (10%), and credit mix (10%). Having a higher credit limit will give you more spending power and keep your credit utilization rate low.
3. Become an authorized user.
When a primary user or cardholder adds an authorized user to an account, that account will appear on the user’s credit report. The authorized user will get access to the account and line of credit and may receive their own credit card. This will help the user to build or restore their credit only if the account is managed well. It also serves as an excellent tool for teenagers to learn to make smart financial decisions before opening their accounts.
4. Pay bills on time.
Payment history is one of the most significant factors when it comes to determining your credit score. So, paying the utility bill, cellphone company, or gym membership on time can significantly stimulate your credit score history. Setting up automatic payments can help you avoid any late fees. Subscriptions and memberships will not help build your credit score, but if not paid on time, they could hurt it. If you struggle to pay your bills on time, contact the merchandiser or your financial institution to discuss any potential hardship options.
5. Open a secured credit card with ALLIANCE.
A secured credit card is an excellent option for someone wanting to build or fix their credit. With a secured credit card, an initial deposit is required that is typically equal to your credit limit each month. For example, if your initial deposit is $1000, your credit limit will also likely be $1000 monthly. Some institutions, including ALLIANCE, will hold 120% of funds on Secured Credit Cards. For example, if a member’s credit limit on the secured card is $1000, we would hold $1200 (to include the 20%) in their share. Doing so is low risk for the creditor because, if you miss a payment or must cover any fees, they can take from your initial deposit. account. Once you have built up your credit, you can talk to the creditor about possibly switching to an unsecured card. If you have not missed any payments, you’ll receive your initial deposit back when closing the account. Check out what ALLIANCE has to offer with the Visa Secured Credit Card.
