For example, you’ll pay more in interest when applying for a mortgage loan. Plus, the terms will be less favorable.
But is it possible to improve your score quickly? That depends on your definition of “quick.”
Following the tips below, usually you can see a boost within 30 days, but it does take some work on your part.
Credit Utilization Rate: The Key to Boosting Your Credit Score Quickly
The fastest way to boost your credit score is to lower the amount of revolving debt you have. Usually, this means credit card balances.
Your credit utilization rate is the percentage of credit you use against the amount of credit available to you.
Typically, you don’t want to use more than 30% of your credit limit. For example, with a $500 credit limit, don’t spend any more than $150.
If you are using more than 30% of your credit limit across all cards combined, consider making payments more frequently, as much as twice per month.
Here are 3 more ways to reduce your credit utilization rate.
Request a Credit Limit Increase
If you’re carrying high credit balances, bump up your credit limit but do not use any more of the available credit!
Some credit card issuers make it easy to request a credit limit through your online account. Citi is one of those companies. You can also call the number on the back of your card.
You should know that some credit card companies conduct a hard pull before allowing you to have a higher credit line. So that can ding your credit score by a few points.
Apply for a New Credit Card
Another way to reduce your credit card utilization ratio is to apply for a new credit card. By adding a new card, you are also adding a new line of credit which boosts your overall credit line.
If your credit is fair or poor, add a card that helps to build a good credit history such as a secured card.
A secure card requires a deposit in the amount of your credit limit. It also protects the issuer in case you default. This approach can help you lower your utilization rate.
Take Out a Personal Loan
A personal loan with a lower interest rate will pay off those high interest rate credit cards. You’ll also have one monthly payment and a set repayment period.
Further, a personal loan is considered installment credit instead of revolving credit. That means it does not count towards your utilization rate.
4 More Ways to Boost Your Credit Rating
Here are 4 additional ways to boost your credit rating.
Check for Credit Bureau Errors
You’re entitled to a free credit report from each of the credit bureaus yearly, Experian, Equifax, and TransUnion. Take advantage of this offering to see what the financial world says about your credit health.
You’ll also want to check for errors. It happens, and it can negatively affect your credit standing without you even knowing it! If you find errors, dispute them.
There is a longstanding myth that if you pull your own credit report, you’ll negatively impact your score. That is not true.
You can order your credit report as many times as you like, and it will not hurt your credit history. Nor will it affect lending decisions.
Check Old Debts on Your Credit Report
There is a statute of limitations of 7 years on negative items on your credit report. If you see an infraction, report it to the credit bureau to have it removed.
Set Up Automatic Payments
For those recurring bills, set up automatic payments! You’ll never have to worry about making on-time payments again.
Set Up Payment Plans with Creditors
Do you have delinquent debt? Set up a payment plan with your creditors before the debt is sent to collections.
Get the terms in writing so you are assured the debt will not go to a collections agency as long as you honor the terms of the agreement.
Conclusion
Once you improve your credit score, you don’t want to lose it. So, stay on top of any credit changes and use your credit wisely!
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