Take 30 Minutes To Raise Your Credit Scores 40-100 Points.
Let me start off by saying that understanding how the three major credit bureaus arrive at your credit score is one of the most powerful pieces of knowledge you can have. Most likely this is not something that you have ever been taught. In fact, when it comes to your credit scores, the three major credit bureaus, Equifax, Experian, and Transunion, run sort of a “black box” operation.
To explain what makes up your credit score in as simple terms possible, this is how it works
Payment History: 35%
Payment history makes up the largest piece of your credit scoring model. It reflects how timely you make payments to your creditors.
Credit Utilization 30%:
The percentage of available credit used. Keeping your account balances below 50% of the available credit limit will maximize your scores. For the purpose of this article, this is where we will find the most room to quickly increase your scores.
Credit History: 15%
Credit history indicates the length of time your credit has been open for. Newer accounts aren’t regarded as well as older accounts are.
Recent Inquiries - 10%
Your recent inquiries show any inquiry made to your credit report from a prospective creditor. Too many inquiries can cause your scores to be lowered.
Types of Credit In Use - 10%
Your types of credit in use lists how many accounts you have, and what kinds of accounts they are. Having too many loans can lower your scores.
Now that we have a little knowledge under our belts, here are the 2 things you can do in the next 30 minutes to gain some points very quickly
Raising Your Limits -
It’s often easier to raise your limits than you think it might be. You might not realize that most times, all you have to do is ask that your limit be increased and your wish will be granted. Call the customer service department of your credit card company and let them know you’re looking into transfering your balance to another card with a lower interest rate and a higher credit limit and that you’d like to keep your account with them, but only if they are willing to make the concessions you are asking for. A lower interest rate might just come with your new, high credit limit! A lower interest rate won’t help your credit scores, but it will definitely help your financial situation.
For example: Say you have a credit card with a $5,000 limit and your balance on it is $4,000. That would mean that 80% of your card is being utilized. One fast phone call gets your credit limit raised to $6,500. Your credit utilization is now 62%, which will vastly increase your scores. As stated above, keeping your balances below 50% of your limit would help you immensely.
Lower Your Balances -
Using the existing example, your credit card has a 62% credit utilization on it. You can still maximize your scores on this card. Paying $750 down will bring your balance down to 50% of the credit limit, or having $3,250 balance on a $6,500 credit limit credit card. Even if you can’t afford to pay the $750, you’re still sitting pretty because you’ve already increased your scores by having your limit raised. Keep in mind, though, if you are trying to purchase a home or a car, you can save thousands of dollars in interest on your new loan, and you can also get an even lower monthly payment, just by paying down your existing accounts. That will result in even better credit scores and the terms of your loan will be even better than before!
These are very powerful techniques. I have seen this work for clients time and time again. One client recently was able to raise the credit limits on 3 credit card accounts and raise their scores by 105 points immediately.
If you have a good credit history and at least 3 open, established accounts on your credit report, these tips could produce fantastic results! If you have less than perfect credit or a negative credit history, a more aggressive approach might be the way to go.
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