You don’t have to be a credit expert to implement modest adjustments that could significantly improve your credit score. In fact, there are several easy techniques for increasing your credit score without doing much work. There are many small changes you can make that will have a big impact on your credit score. In our series of Credit Hacks, we will share how you increase your credit with little to no heavylifting.
Improve Your Credit Score
A higher credit score opens the door to significantly lower rates on loans and credit cards. You can save a fortune in interest fees by improving your credit score. In addition, there are other benefits, such as better rental cost options and employment opportunities.
Here’s one of the fastest and easiest ways to help increase your credit score right now: Pay down high-balance credit cards.
Here’s why this is important: The credit scoring models generally base 30% of your credit score on your utilization rate. Try to reduce your card’s balance to less than 10% of its credit limit. For example, if you have a $1,000 credit limit on your card, try to keep your balance at $100 or less. To help you lower your balance faster, request a lower interest rate or reduce your utilization with a credit limit increase.
Most credit cards allow you to get a lower interest rate just by asking. If your card has a variable interest rate, call and ask if you qualify for a lower fixed rate instead. If you can’t get a lower interest rate on that card, consider transferring some or all of the balance to another card with a 0% interest rate and low transfer fees.
Moving credit card balances around may sound like it’s too much work to help improve your credit score, but the effort is worth it. The good news is once you graduate to a new, lower interest rate (or get used to your lowest balance of $100 or less on each card), you’ll be more motivated to keep it that way.
Second Credit Hack Option
Here’s a second and often-overlooked way to improve your credit score: Request a credit limit increase. Increasing your credit limit will automatically lower your credit utilization rate, thereby improving your credit score!
Let’s say you have a $500 balance on your credit card with a $1,000 limit. That means you’re using 50% of the total amount available, which isn’t good for your score. If you request and get approved for a credit limit increase of $2,000, your utilization rate will automatically fall to 25%, which is way better for your credit score. It’s like getting a lower interest rate because you’re using less of the available credit.
Besides improving your credit score, reducing your utilization rates has other benefits as well: You’ll avoid the risk of hurting your credit score by using too much available credit, and paying down high-interest rate cards can save you hundreds or even thousands of dollars in fees annually.
Good luck – let u know in the comments if you’re trying these methods out.