The global situation with Covid-19 has changed many things in our lives – how we live, how we earn money, and how we spend them. The pandemic has had a huge impact on the economy all around the world, and although we may not notice it yet, but these changes will show up later.
Taking all of this into account, we need to be prepared for any turn of events. One of the things that will help us financially is improving our credit score. We heavily depend on our credit score whether we want to apply for a credit card or get a loan or a mortgage.
In this article, I’m going to offer you a few tips that will help you increase your credit score fast. So let’s get started!
Mind Your Credit Utilization Rate.
The credit utilization rate is the percentage of your credit limit that you have used during the month. Not only each credit card has this rate, but also every person has an overall credit utilization rate in their credit history. The key to improving your credit score is to keep this rate as low as possible. That’s great if you could keep it at 30%, but if you manage to reduce it to 10%, then your overall credit score will improve instantly.
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Here are a few details you need to keep in mind though. First of all, try to keep low not only one of your credit cards, but also your overall credit utilization rate. Secondly, call your creditor to find out when they send your credit reports to the credit company. This will allow you to pay off the credit by that date that will improve your credit history. You’ll learn more about it in the next tip.
Break Your Payment In Half.
The credit reporting companies see our credit history not the way we see it. The thing is they receive the reports from creditors only once a month (and the date is different for different companies). So let’s assume that the limit on your credit card is $1,000. You use it to pay for everything, so by the end of the month, you achieve your limit. But even if you paid it off a few days later, your credit information may have been sent to your credit reporting company already. So what will they see? They will see that you’ve used 100% of your balance and haven’t paid it off yet.
Let’s say, you have a rewards credit card, so in order to get the rewards, you need to use it as much as possible. Luckily, there is a trick that may help you improve your credit utilization rate and still get the rewards. All you need to do is to break all your payments into two parts. And in case, you have a big purchase coming up, be ready to pay it off as soon as possible.
Keep Your Credit History Clean.
Collection accounts – no matter whether they are paid off or not – are a huge threat to your credit score that will play an important role in the case, you apply for new credit or loan. In case, you have an unpaid collection account, make sure to pay it off as soon as possible. But if you have a paid-off collection account, you need to contact your creditor and ask them to remove this information from your credit history.
Any mention of debts or late payments in your credit reports can be used against you. It would be perfect if you could pay off your credit on time to avoid any negative consequences, but even if you have a record of late payments, try to have it excluded from your credit report history to avoid any difficulties in the future.
Raise Credit Limit On Your Card.
If you have a higher limit on your credit card, let’s say $5000, but still, spend the same amount as before, your credit utilization rate will decrease automatically that – as we have learned before – can have a positive impact on your overall credit history.
There are two ways how you can do that – you can simply ask for it or apply for a new credit card. Now, the second way has a couple of pitfalls you need to know about. First, applying for a new card makes your creditors do a more close review of your credit history. And if it`s not perfect, you can be rejected for a new credit card. Also, if you open a few new accounts in a short period of time, it may get suspicious and harm your credit history.
All in all, be very careful using this tip. Even if you manage to raise your credit limit, there is still a risk of getting carried away and spend more than you can pay off.
Get A Friend’s Help.
If you have tried everything else, but still couldn’t improve the situation, maybe it’s time to ask a friend for help. For this tip, you will need a very good friend who has a perfect or next to perfect credit history and a low credit utilization rate.
If you have a friend like this, ask them to add you as an authorized user to their credit card. If they decide to help you, their credit account will appear on your credit report as well. And as long as they proceed with their payments on time, it will improve your own credit report too.
The only difficulty you may face here is that you will need someone who really trusts you because technically they’ll need to give you access to their account and allow you to spend money in their name which can be a very sensitive matter. But if it works, you will improve your credit situation a great deal.
Keeping your credit score high is not a difficult task and demands mainly just consistency and some common sense. Basically, to do well on credit reports, you need to do two primary things: do the payments on time and keep your balance low.
If the situation doesn’t improve, give one of the tips I’ve shared above a try, and I’m sure very soon you will see your credit score improving.
“If you have any feedback about 5 ways to increase your credit score fast that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”
NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.