Your credit score is all-important these days, and that's never more true than when a consumer is 30 days out from applying for a big loan like a mortgage or a car loan, obtaining some types of insurance, or even applying for a job. For that reason, it sometimes becomes critical to boost your score in a hurry to save money by taking advantage of the best interest rates - or even get approved at all. While it's recommend you monitor your credit and keep a good score all year long, here are some strategies to give it a jump start in short order if you need to achieve that goal of 30 points in 30 days.
Order and scrutinize your credit report.
You’d be surprised how many people neglect to obtain and review a copy of their credit report. Why is that so important? A 2012 study by the Federal Trade Commission reported that at least 20% of consumers have an error on at least one of their three credit reports (which largely determine your credit score.) That’s 1 in 5 people who have something glaringly wrong on their credit report! Those mistakes cost you dearly. The same reported estimated that 13% of consumers had credit-report errors that impacted their credit scores. These days, identity theft also impacts about 8% of the population per year, so it’s essential you review all three credit reports thoroughly and address any errors. If you don’t know exactly what’s hurting you and what needs improvement, it’s going to be hard to achieve a 30-point increase within 30 days!
Blue Water Credit can obtain a copy of your full credit report and go over it with you in detail during our no-risk consultation. Contact ushere to schedule or if you have any questions.
Pay down your credit-card debt.
The surefire way to increase your credit score in a hurry is to pay down your debt. But it’s important to do this correctly, because which accounts you pay down and how much make all the difference between a skyrocketing score and one mired in mediocrity. It’s usually wise to focus on paying off credit card debt because the algorithms used to compute credit score weigh credit card debt more negatively. By paying your debt down, you’ll be improving your “credit utilization ratio,” which is the amount you owe versus the total spending limit. While general wisdom is to pay down your debt lower than 30% of your total limit (about $3,000 or less for a $10,000 limit,) that’s actually inaccurate information. It’s recommended you pay down to 10% or less, and in fact, FICO states that borrowers with the best credit scores – 785 or higher – use keep an average of only 7% of their credit card limit.
Remember that car loans, mortgages, utilities, and student loans are not counted against the credit utilization ratio, so focus on paying down your credit card debt below 10% for the best quick score boost!
Ask for a credit line increase.
If you don’t have the means to pay down your credit card debt immediately, you may want to consider another effective option. A consumer can call up their credit card company and ask for an increase of their spending limit. If approved, the account will immediately show the higher available credit, and your credit utilization ratio will be greatly improved, even without paying down your debt at all! In fact, achieving a very low or zero debt utilization ratio can improve your credit score up to 100 points in most cases!
Use personal loans to pay off credit card debt.
Most people don’t have enough money in savings to immediately pay down their credit card debt to boost their score. But there is another option – taking out a personal loan. Your bank or credit union will let you apply for a personal loan based on your total financial picture. If approved, you can easily use that money to pay down credit card debt. Why is that helpful? Personal loans are factored as installment debt for the credit bureaus, not revolving debt, so your credit score won’t take a hit. In fact, it should rise precipitously as you reduce your “bad” credit card debt and improve your ratios. Additionally, private loans usually have fixed interest rates that currently hover around 11.36%, according to Bankrate.com, while the average credit card is closer to 13-14%.
Be selective.
Even though you have great intentions, be careful when paying off or closing various accounts from your credit report. Focus on paying down credit card debt first, but you don’t necessarily want to close accounts, which might erase an established account and actually hurt your score! The same thing applies for paying off collections and other accounts – if items are very old, inactive, or certain kinds of installment debts, paying them off could actually make them re-report to the bureaus, and therefore hurt your score. To achieve a 30-point increase in 30 days we need to make sure you pay off the right debt so you don’t move backwards!
Become an authorized user on someone else’s credit card.
One of the most efficient way to increase your credit score in a short time is by becoming an authorized user on someone else’s credit card. Once you’re authorized, the new positive trade line will show up on your credit as if you’ve had it for the duration. It’s important you do this correctly – it has to be a credit line in great standing. FICO knows a lot of parents do this to build their teen or college-aged children’s credit – and it’s a perfectly legal practice.
Add missing accounts.
A surefire way to build your credit is to add positive accounts that aren’t currently being reported. It’s your right to request that unreported accounts start being reflected on your credit. For instance, cell phones, Internet providers, utility companies, and medical billers often don’t bother reporting credit (because it’s not mandatory.) But if you ask them to do so, they very well might comply – posting a well-seasoned, positive new trade line on your credit score.
Order and scrutinize your credit report.
You’d be surprised how many people neglect to obtain and review a copy of their credit report. Why is that so important? A 2012 study by the Federal Trade Commission reported that at least 20% of consumers have an error on at least one of their three credit reports (which largely determine your credit score.) That’s 1 in 5 people who have something glaringly wrong on their credit report! Those mistakes cost you dearly. The same reported estimated that 13% of consumers had credit-report errors that impacted their credit scores. These days, identity theft also impacts about 8% of the population per year, so it’s essential you review all three credit reports thoroughly and address any errors. If you don’t know exactly what’s hurting you and what needs improvement, it’s going to be hard to achieve a 30-point increase within 30 days!
Blue Water Credit can obtain a copy of your full credit report and go over it with you in detail during our no-risk consultation. Contact ushere to schedule or if you have any questions.
Pay down your credit-card debt.
The surefire way to increase your credit score in a hurry is to pay down your debt. But it’s important to do this correctly, because which accounts you pay down and how much make all the difference between a skyrocketing score and one mired in mediocrity. It’s usually wise to focus on paying off credit card debt because the algorithms used to compute credit score weigh credit card debt more negatively. By paying your debt down, you’ll be improving your “credit utilization ratio,” which is the amount you owe versus the total spending limit. While general wisdom is to pay down your debt lower than 30% of your total limit (about $3,000 or less for a $10,000 limit,) that’s actually inaccurate information. It’s recommended you pay down to 10% or less, and in fact, FICO states that borrowers with the best credit scores – 785 or higher – use keep an average of only 7% of their credit card limit.
Remember that car loans, mortgages, utilities, and student loans are not counted against the credit utilization ratio, so focus on paying down your credit card debt below 10% for the best quick score boost!
Ask for a credit line increase.
If you don’t have the means to pay down your credit card debt immediately, you may want to consider another effective option. A consumer can call up their credit card company and ask for an increase of their spending limit. If approved, the account will immediately show the higher available credit, and your credit utilization ratio will be greatly improved, even without paying down your debt at all! In fact, achieving a very low or zero debt utilization ratio can improve your credit score up to 100 points in most cases!
Use personal loans to pay off credit card debt.
Most people don’t have enough money in savings to immediately pay down their credit card debt to boost their score. But there is another option – taking out a personal loan. Your bank or credit union will let you apply for a personal loan based on your total financial picture. If approved, you can easily use that money to pay down credit card debt. Why is that helpful? Personal loans are factored as installment debt for the credit bureaus, not revolving debt, so your credit score won’t take a hit. In fact, it should rise precipitously as you reduce your “bad” credit card debt and improve your ratios. Additionally, private loans usually have fixed interest rates that currently hover around 11.36%, according to Bankrate.com, while the average credit card is closer to 13-14%.
Be selective.
Even though you have great intentions, be careful when paying off or closing various accounts from your credit report. Focus on paying down credit card debt first, but you don’t necessarily want to close accounts, which might erase an established account and actually hurt your score! The same thing applies for paying off collections and other accounts – if items are very old, inactive, or certain kinds of installment debts, paying them off could actually make them re-report to the bureaus, and therefore hurt your score. To achieve a 30-point increase in 30 days we need to make sure you pay off the right debt so you don’t move backwards!
Become an authorized user on someone else’s credit card.
One of the most efficient way to increase your credit score in a short time is by becoming an authorized user on someone else’s credit card. Once you’re authorized, the new positive trade line will show up on your credit as if you’ve had it for the duration. It’s important you do this correctly – it has to be a credit line in great standing. FICO knows a lot of parents do this to build their teen or college-aged children’s credit – and it’s a perfectly legal practice.
Add missing accounts.
A surefire way to build your credit is to add positive accounts that aren’t currently being reported. It’s your right to request that unreported accounts start being reflected on your credit. For instance, cell phones, Internet providers, utility companies, and medical billers often don’t bother reporting credit (because it’s not mandatory.) But if you ask them to do so, they very well might comply – posting a well-seasoned, positive new trade line on your credit score.
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