Blog posted On January 05, 2022
Your credit score is one of the most important factors in your loan application. Sometimes, building a credit score can take time, but there are some quick fixes that can help you boost your credit score fast.
Paying off your balances might seem like a no brainer. However, there are different tactics you can use when paying down your credit balance. Sometimes, carrying a balance can boost your credit score. It just depends on your credit utilization ratio. Your credit utilization ratio is the total credit you’re using divided by the total credit you have available. So if you had a credit card with an available balance of $5,000 and you spent $2,500, your credit utilization would be 50%. Most financial experts recommend keeping your credit utilization below 30%. If you can keep a low credit utilization and carry a small balance, this demonstrates that you can manage debt well which could help boost your credit score. If your accounts are always at zero, it might look like you’re not using the credit you’ve been given. Therefore, it wouldn’t necessarily show that you can handle debt well. Bringing down your credit utilization has a relatively quick impact on your credit score. As soon as your credit card reports a lower balance, that lower utilization will be used in calculating your credit score. Credit utilization is the second biggest factor in calculating your credit score.
With higher credit limit, you can easily bring down your credit utilization ratio. If your available balance suddenly goes up to $10,000 instead of $5,000, your credit utilization (with $2,500 spent) would suddenly be 25% as opposed to 50%. If your income has increased or you have demonstrated good credit over the past several years, you have a pretty good shot of getting a higher limit approved. You can get a higher limit approved fairly quickly – you would just need to contact your credit card issuer.
If your partner or relative has a credit card account with a high limit and a good history, you could ask to be added as an authorized user. This means that the account will be added to your credit reports, which can help boost your credit utilization ratio. The person who’s account you’ll be added to does not need to give you access to their credit card or account number. Once they talk to their credit card company and add you as an authorized user, you could see immediate results on your credit score.
The biggest factor in your credit score is the timeliness of your payments. No strategy can help you boost your credit score more than paying your bill on time. Plus, it’s one of the easiest strategies to enact. Though paying your bills on time won’t necessarily boost your score immediately, paying them late (30 days or later) can do damage to your score relatively quickly.
Any errors on your credit report could bring your score down significantly. Make sure that you are checking your credit reports regularly and disputing any errors in order to get them wiped from your account. Though this could be a lengthier process than some of the other strategies, it is just as important.
6. Get credit for rent and utility payments
Paying rent on time can boost your credit score if rent reporting services are available by your tenant. However, rent payments are not factored by every scoring model. Though VantageScore includes them, FICO does not. The boost to your credit score can be instantaneous, but the process to get a new card and get your rent reported to that card can take some time.
To learn more about your credit score and its impact on your mortgage application, contact us today.