Having the best credit score can be highly beneficial at times. It could be for refinancing your mortgage, getting approval for your new credit card, etc. There are several other reasons why having a good credit score is important for you. Improving credit score can take time but if you are looking for ways that can help you improve the score quicker, you would be happy to know that there are options.
You might wonder how long it takes to increase a credit score. Let us be clear that it does not happen instantly but by following the suggestions below, you can improve your credit score in a couple of months.
Know The Date When The Issuer Reports Payment History
Give your credit card issuer a call and know about the dates when your balance is reported to the credit bureaus. It is usually the closing date or the statement date and not the due date on your statement.
The credit utilization ratio reflects the ratio between the amount of credit approved to you against the amount of credit available. The ratio is available for your cards both collectively and individually.
The recommended ratio for both cases should be less than 30%. However, if you are looking to boost your score, bring it under 10%. You must be paying off your balance each month but always make sure you do so before the reporting date. If it is after that, your reported balance might be higher and can negatively impact the ratio.
Strategically Reduce Your Debts
To explain this, let us take an example. For instance, you might have 2 credit cards with a utilization ratio of 40% and 10% respectively. FICO score will consider the ratio for both your cards individually. Hence, to quickly increase credit score, consider paying down the card that has a higher balance i.e., the one with 40% utilization.
Make Payments at Least 2-3 Times a Month
If in recent times you had a rough time dealing with your finances with some unanticipated expenses. You might have used your card to fund those expenses. Doing so can temporarily throw the utilization ratio and drastically pull down the credit score. Hence, a good idea would be to make payments two weeks before the closing date and another one just a couple of days before.
Avoid using a credit card to pay off a big bill if you are planning to carry a balance. The compound interest can surprisingly increase your debts quickly. You should not be using your cards for long-term loans unless there is a card that comes with a 0% introductory APR on purchases. Even in such cases, it is advisable to make a payment before the intro period expires.
Increase Your Credit Limits
Strictly not for those who have a habit of overspending. The idea to get your credit score increased on your cards is to bring down your utilization ratio. However, it is only helpful when you do not end up using the increased credit limit. Additionally, this suggestion will not be helpful if you had missed payments recently or your credit score declined in the past month.
For a credit issuer, this might be an indication that you have a financial crisis and looking for extra credit. It could eventually make them rethink and decrease the credits. Therefore, analyze your situation before trying this suggestion.
Mix Your Credit Options
If we review our mix of credits, most of us might realize that we do not have the right mix. You might have credit cards with low utilization ratios along with a mortgage where you had missed an installment a few years back. Here you might think of taking a car loan at a low-interest rate to raise the score a bit. Initially, the score might drop, but after 5 to 6 months, it will start improving. A credit mix is only 10% of the FICO score but little efforts like these can push your credit from good to excellent.
Final Thoughts
To keep things simple, boosting your credit score needs disciplined effort and following basic rules. The two important ones are:
- Maintain Low Credit Card Balances
- Pay Bills on Time and preferably in full
Always remember carrying a balance would never help to build a good score. Doing so can negatively impact your credit health. You might consult our financial experts at Super Credit Repair if you are living in and around Clearwater, FL. We can help you deal with financial planning and guide you to increase your credit score.
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