4 Quick Tips to Improve Your Credit
Credit Scores. It can be one of those touchy topics depending on how you see it. Your score can take years to build up and just months to destroy. We've all suffered from credit mishaps; from forgetting to make a payment to utilizing all of your credit. Sometimes, a bad score can be a result of something out of our control- divorce, medical bills, and bankruptcy. Simply, maintaining your credit is a way of life. Since almost all big purchases require credit, A low score will make everything more expensive. You'll have to pay a higher interest rate on loans over time.
A score Is used to show credit history, on-time payments, responsibility and discipline. A low credit score will improve naturally over time, so do not lose sleep over it. However, if you have upcoming equipment financing or leasing needs in the near future. It'd be smart to try raising your score beforehand. That can be the deciding factor between boosting you into the next tier and saving money.
Let's be realistic. There's no miracle method to raise your credit score 100 points in a month. Some Credit Repair "Experts" will try to fool you into believing this can be done, but it's simply impossible. You hear it all the time in advertisements – "1-2% APR for excellent credit", but you're never sure what exactly is excellent credit. Let's break it down, there are 4 tiers of credit.
Tier 1 (Excellent Credit): 700 and above
Tier 2 (Good Credit): 660-699
Tier 3 (Fair Credit): 620-659
Tier 4 (Poor Credit): 619 and below
Credit score
Tier 1 and 2 typically get the best rates. Tier 4 is usually the most difficult to get approval for. Even if you have a Tier 3 score, it's still advisable to try and improve your score. It's a significant part of your life and business. If you're a new business without cashflow statements, it can be hard to obtain financing. Many Lenders will use your score to assess you. That's why it's important to improve your credit score when you can.
Here are our 4 best hacks for quickly improving your credit score. The improvement can be anywhere between 10 points to 40 points which should be enough to bump your credit score up. Note: These are quick tips to boost your score up, we will have a more comprehensive guide on maintaining your credit later.
Dispute the negative marks – We get it. It's hard to pay your bills on time sometimes. Between juggling your business and family, paying your bill sometimes slips your mind. There's 3 major credit reporting bureau: TransUnion, Equifax, and Experian. Your credit report with all of them will vary a little bit. Contact them and dispute whatever you can. Write as much as you can with your dispute and make copies of everything.
NOTE: Spend time and be thorough – This can make a huge impact on your scores.
Open A New Secured Credit Card – According to Credit Karma: People with a credit score of 800 and above typically have 7 open credit cards. While you do not want to open more than 1 a year, 7 is just a guideline number to aim for. No matter how bad your credit score might be, you can still get approved for a secured credit card. Secured Credit Cards are the best way to rebuild your credit. You'll have to put a deposit down, but the lender will give you a line of credit. To pick a good secured credit card to use, we would use this Guide by Magnify Money.
NOTE: You want to keep your credit utilization under 30% usage, so monitor your usage accordingly. Only open 1 credit card as doing more may hurt your score.
Raise your Credit Limits – Call your existing card companies and ask for your limits raised. If you're not at 100% credit utilization, it'll be helpful to get your limits raised. Even if it's just a 10% increase, It'll help your overall report health.
Become an Authorized User – This one is a little tougher to do. You'll need someone who is in good credit standing. They'll add you to their existing credit card accounts. You'll be provided a card linked to their account and liable for charges spent. Family members and Close friends are going to be the people you ask. Understandably, It'll be difficult convicting someone to add you, so do not take it personally. Becoming an authorized user can cause a boost in score up to 50 points!
TIP: Do not use the card when you get added. Shred it so you will not have any temptation.
Leveraging your credit is important to getting the most out of your money. Hopefully with these 4 hacks, you'll get the score improvements that you need. The usual advice applies, do not overspend with your new increased credit limits and pay your bills on time! Many people have success using the autopay feature to eliminate late payments. Feel free reach out to us and let us know how this has benefited you!