Tips on How to Increase Credit Score: The Fastest and Easiest Ways

Tips on How to Increase Credit Score: The Fastest and Easiest Ways

Tips on How to Increase Credit Score: The Fastest and Easiest Ways

Improving Credit Score is an important task if you want to achieve and secure your financial goals. A good credit score will help you avail loans with competitive rates and can even help your loans get approved easily.

It might sound quite complicated to you, especially if you’re not familiar with it and we are here to help you understand it better.

There are several factors that you need to understand if you want to quickly increase your credit score. And to help you better understand them we made a list of the THREE MAJOR THINGS that affect your credit score.

DIVING INTO THE THREE MAJOR THINGS THAT AFFECT YOUR CREDIT SCORE...

  • Your Utilization Rate

Your Utilization Rate or Credit Utilization Rate the rate you’ll get when you divide the amount of credit you are currently using by the amount of credit available for you to use. If you have a $5000 limit, the $500 that you use is 10% utilization.

Or, if you own two credit cards with a $5000 limit on both of them, and you use $500 that is 5% utilization. (Because $5000 per card is $10000. And $500 divided by $10000is 5%.)

If you want to increase your credit score, you must keep your credit utilization low. A utilization rate which is only between 0%-9% is considered excellent, while 10%-29% is considered good, and 30%-49% is already considered fair.

On the other hand, 50%-47% utilization is already considered very poor. The key to improving your credit score is to keep your utilization in the excellent range.

And you can keep an excellent rate by spending just a small percentage of the total amount of credit that you have. For example, if you have a $5000 credit limit available, only spend 0-9% of that amount to keep your utilization rate low.

  • Your Payment History 

Another important factor that affects your credit score is your payment history. Payment History tells whether or not you pay your bills on time, or whether or not there are any defaults on your credit report.

Your payment history includes your payment information on different types of accounts, if you have more than one of the ff accounts:

  1. Credit cards

  2. Mortgage

  3. Installment loans

  4. Any retail account.

  5. Any adverse records like bankruptcies, criminal record, etc. can reflect on your payment history.

  6. How long it has been since the appearance of any adverse records

  7. Late payments and how past the due date they are.

  8. How many long overdue payments are there on your credit report

  9. How many of your accounts are paid?

  10. How much money or items you owe on accounts that may or may not be paid.

To make the long story short, you just need to be a good payer in all of your loan and credit accounts to have a good credit score.

  • The Derogatory Marks

A derogatory mark on your credit report appears due to breaching or failing to pay your loan/ credit based on the agreement. These negative marks on your credit report will last by up to 7-10 years or even longer.

Late payments of bankruptcy records can damage your credit score, furthermore if it is partnered with an already low score. And to keep acing your credit score, you must avoid having these so-called “derogatory marks”.

So, How to Raise Credit Score Instantly?

Now that you have learned what makes up your credit score, it is high time to consider asking “how do I boost my credit score overnight?”.

Sad to say but there are no shortcuts when it comes to increasing your credit score from a low score of 600 to a high score of 720.  It can’t and will never happen overnight.

As said above, keeping your utilization in the excellent range (0-9%) will create a major impact on your score. Continually doing so for a few months can eventually increase your credit score.

Similarly, making sure that you pay your rent or your credit card on time to avoid default or any derogatory mark to appear on your credit report can also affect your score big time, in a positive way.

But, aside from the major components that affect your credit score, there are also a few more factors that you should consider if you want to dramatically increase your credit score.

1.The average age of your account

Whether you have a credit card that is ten years old, or if you have other types of credit, the average age of your account has a crucial role in calculating your credit score. It builds a strong foundation for your cards as it is one of the factors that contribute to your credit history. 

2. The total number of accounts

Most people think that having more than one card is bad which is totally false. In fact, the more cards that you have, the better.

This is because Banks would think that you can manage multiple credit cards and your credit very well. Having one card is not bad, but having two or three cards and paying them off completely can help you gain trust from the banks.

It is like showing them that you are good at managing your finances.

Inquiries

Inquiries are basically the times when you inquire for application for new credit. But the only inquiry that gets listed on your credit report is the ones that come from your applications.

Then, they will do a hard inquiry on you which means, it will remain on your credit report for a couple of years and most especially, affect your score. A hard inquiry, by the way, can lower your score by a few points.

So, if you are planning to apply for a new credit card, this is one thing you may want to consider first before doing so. More than one credit card is good, but too many credit cards may hinder your score from going up.

Again, there are no shortcuts when it comes to building your credit score. None of this can boost your credit score overnight.

However, if you focus on maintaining a low utilization rate, paying your bills on time, avoiding the appearance of any default or derogatory marks on your credit report can make a huge difference.

If you want to learn more about how to BUILD, REPAIR, or anything ABOUT credit, you can browse through our other blogs to find helpful and informative insights.

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