Josh has been writing content online for over five years and has millions of views. He creates content on tech, fitness, money, and family.
1. Ask for More Credit and Raise Your Credit Score
One of the factors of a credit score is your credit utilization. Put simply, credit utilization is the percentage of available credit that you're currently using (what you owe). For example, if you have one credit card with a $100 limit and you have spent $99 on said card, then your credit utilization would be at 99%. Typically, creditors like to see that you're under 30%, which would give you a great rating for the credit utilization category of your credit score.
Just a few months ago, my credit utilization was around 86%. My payment history for each of my credit cards was good. So I devised a way to lower that utilization fast. I asked a few of the companies that issued my cards for a no-credit-check credit limit raise. Some of the companies went for it just based on my current balance and the fact that I had a solid payment history. After my credit limit was raised on multiple cards, my credit utilization went down to 53%, and my score went up between 17 and 22 points on each credit bureau. The effects of the change only took about 45 days from when I called.
Take note that I asked for a no-credit-check credit limit raise. If a company informs you they will have to run your credit, don't do it. You would be taking the risk of lowering your score by having another credit inquiry on your report. Always try to avoid anything that will harm your report until you are sure your credit is where you need it for whatever you need it to do.
2. Piggyback by Getting Authorized on Someone's Good Credit
So let's say you have a friend or a family member who has stellar credit. Their good credit can actually help you uplift your credit score as well. All you have to do is convince them to add you as an authorized user on one or more of their accounts. You do need to ensure the account meets certain criteria.
First, the account needs to be in good standing and with no late payments. The account should be as old as possible. I would say no younger than seven years and definitely not more than a couple of years younger than your oldest open account.
Other important factors to consider are the credit limit and credit utilization on the account. Make sure the utilization of the piggyback account is below 30% and the limit is as high as possible. The higher the credit limit, the more it will help your credit utilization ratio. You are essentially going to raise your max credit limit across all cards and thus lower your credit utilization. This is one of the easiest ways to boost your credit, but please remember to choose your credit savior wisely. If they decide to max out the credit line or miss payments, it's gonna hurt you too.
If done right, getting authorized on someone's credit will increase the overall age of your accounts, improve your on-time payment ratio, and lower your credit utilization ratio. Those can all improve your score dramatically. Don't pay to be added to someone's account, though—FICO can sniff that out. Stick with someone you trust and who would make sense letting you use their credit. Parents and grandparents are, in my book, the norm. Be smart because this method is a gamble.
If done right, getting authorized on someone's credit will increase the overall age of your accounts, improve your on-time payment ratio, and lower your credit utilization ratio.
3. Pay to Improve Your Score
Can you pay to get an improved credit score? Well, sort of. Another credit score factor is derogatory marks. Having a derogatory mark usually means you failed to pay, and now the account is in collections. Creditors have probably been attempting to contact you. Those derogatory marks usually stick on your report for seven years; derogatory marks can really drag down your score. Paying them, on the other hand, can improve your score in just about 45 days.
When dealing with a collector, be as polite and helpful as possible, but ask for help in return. Explain that you want nothing more than to pay the debt but do not have that kind of money—yeah, they hear that on every call. Ask them if they would accept a lower settlement, but make it clear that you want the derogatory mark removed and proof the debt is settled in full. Take care of the derogatory marks on your record, and your score will improve, everything else staying the same, without a doubt.
Another way you can pay to improve your credit score is by using a credit repair service. These services will work with creditors to get rid of incorrect, outdated, and unverifiable items on your credit reports, such as bankruptcies, liens, missed payments, charge-offs, collections, and more. I can't recommend a particular service because I did not go that route. It can be costly, and I found it better for my family to dispute or pay off items on our own. If you have the money to spend on a credit repair service, however, they promise big results in as little as 30 days.
4. Start or Continue to Make Your Payments on Time
This should be a no-brainer, but missing payments is one of the biggest causes of low credit scores. If you have had trouble in the past with missing payments, then I suggest thinking about the root cause of your missed payments. If you do not have enough money to pay the bills, then why? Do you not make enough money? Are you living beyond your means? If you have the money to pay, but forget to make the payments on time, then why? Do you have a list of bills to pay and when they are due? Are you taking time each day to think about your finances? Are you entrusting someone else with the bill-paying responsibility? Figure out what is causing you to miss the payments, and then take action and build habits to prevent missing payments again.
5. Make More Money
One reason that some people find themselves with bad or lower than desired credit is that they have too many regularly recurring bills and not enough regularly recurring income. If you don't have the money to pay your expenses, then, of course, you're going to get behind on them. Solution—earn more money.
If you make more money, then you can pay your bills on time, resulting in no missed payments on your credit report. You may be able to pay down your credit balances, which will decrease your debt-to-income ratio. Thus, your score is going to increase. Avoid adding any new bills; doing so will be counterproductive in paying off the debt to increase your credit score.
Here are a few ways to make a little extra money. You may know of some of these methods, but you've gotta get the motivation to implement them and get your score on track with your goals.
- Sell your old stuff on Letgo, eBay, or Amazon.
- Make your own products to sell on Etsy.
- Get a part-time job to make extra money.
- Do odd jobs like lawn care.
- Save more by using coupons and apps like Ibotta.
6. Lower Your Expenses
Let's be honest here—are you living beyond your means? Do you have an expensive car you don't need? Do you have more bedrooms in your house than people living inside of it? How often do you eat out? Do you get the newest phone each year? Ok, enough questioning, but I think you see my point. Even if you think you do all that you can to conserve the money you work so hard to make, there are probably ways you could cut back.
You could make more money to pay your debts down and effectively increase your credit score, but if you also eliminate unneeded expenses, then you will, in turn, pay that debt much faster. So, take a look at every single weekly, monthly, and yearly expense.
Figure out what you actually need and what you can do without. If there is a way to pay less for something, like car insurance, then spend the time to shop around to get a lower price. If you don't use the gym, then get rid of that bill. Start journaling each and every time you spend money on anything.
For example, when you purchase groceries, write down each and every item you bought. Every time you buy a snack out of the vending machine, write it down. When you buy that gift for your friend's baby shower, write it down. You need to have a working knowledge of where your money is being used. You must work to lower how much money is wasted next.
Look at fluctuating expenses such as fuel for your car, electricity, natural gas, and water. Try to cut back on those expenses by eliminating waste. Unplug unused appliances. Turn your lights off when not in a room. When it's hot, wear fewer clothes around the house and keep the air off or at a higher than usual temp. When it's cold, wear more clothes and keep the heat down low or even off if you can. Take shorter showers that use less hot water. Plan as many things as you can in one day to prevent you from using gas on multiple trips. These things may not seem like much, but an extra $50 saved on electricity can really help you pay off those score-destroying debts.
7. Track Your Score Regularly
Just like with your expenses, you must know where your score stands to be able to make meaningful changes. If you're consistently watching your credit score and reports, then you will be able to use that information to make better decisions concerning your money and credit.
There are quite a few services out there that offer free credit scores and reports. Credit Karma is one that I've used for a long time, and I recommend it, but many banks and credit card companies now offer free credit reporting as well. Keep in mind that there are three different credit bureaus and different scoring models; thus, you will likely get different scores from different sources. If you plan on making a major credit purchase like a house or a car, I recommend getting your FICO score. Also, take note that you can request free credit reports from each bureau once a year.
Look at your report at least once a week. You never know when something might pop up, whether it be a derogatory mark for a bill you thought was paid or even someone opening up credit under your name. If you stay on top of it, you can save yourself a ton of trouble and reach your goals much sooner. Don't leave your credit up to chance.
Your Credit Score Is in Your Hands
Just remember that it is up to you to ensure your credit is good. I hope these tips have helped to motivate you to start working on your score. Before I started focusing on my credit, there was no way I could have gotten approved to purchase a house. Now my family and I have a beautiful house in a wonderful neighborhood. Please ask any questions you have below, and I will get back to you as soon as I can. I would also love to hear about your experiences raising your credit. Thanks for reading, and have a wonderful day.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2018 Josh Woods