Are you planning on buying a house this year? Then I’m sure you realize getting a mortgage is going to play a crucial role on when to buy. So what is a loan officer really going to be looking at? They are going to take a very close look at your credit score. You want to make sure that you get approved! And make sure that you get approved for the best terms and rates possible. If your credit isn’t perfect, no worries, you can still increase your credit score quickly. We’ve lined up several strategies to improve your credit score. Can you raise your credit score instantly? Or boost your credit score overnight? Maybe. Can you raise your credit score by 200 points? Or improve your credit score in 30 days? Definitely. Let’s look at 5 ways to improve your credit score fast!
There are five really cool things that you can do today to start improving your credit score quickly. So the first hack on this is actually reviewing your credit report. Now there’s a lot of different places you can go – any of the major credit companies. But going back to reviewing your credit report, get a copy of your annual credit report, it’s free. If you already have a credit card they usually give you free reporting on the reg. Credit reporting agencies have a range of scores for you. If you see that your range is from 600 to 650, what do you think a loan officer will think?
Always take the middle road
A loan officer is going to throw out your high score and your low score. They’re going to take your middle score, and they’re going to qualify you off of that. So even if the 650 would help you get a better rate in terms, a loan officer won’t use it. So we need to know what we can do to help you improve that right now. Attempting to improve your credit score fast is doable. Boosting your score up as high as possible will ensure you qualify for any loan program. As well, it will get the best interest rates on your new mortgage. So, let’s talk about ways to increase your credit score quickly!
Firstly, pay off your debt! But not just any debt… Not all debts are created equal. There’s going to be different debts that count differently for your credit score. Now one of the most significant debts will be your plastic. So if you have credit card debts right now you’re kind of living on borrowed money. Let’s stop living on the borrowed money as much as possible. And let’s go ahead and start paying those down. Because having a high credit card utilization rate is going to throw your credit score out of whack. Now, one-third of all the points on your FICO score is attributed to your plastic. So especially if you have high interest rates, it can make it very, difficult to improve your credit score. Every hundred dollars that you spend you are essentially paying $25 a year every single time you’re charging that card.
To Close or Not to Close
The second way to improve your credit score fast is to not close accounts. That’s right – don’t close them, not the old ones at least. Some people think they need to start closing account in order to get a new one. Like they don’t want too many. First of all, closing an old account decreases the length of time you’ve had credit. If you have a fifteen year old card or bank account that you never use… Doesn’t matter. Keep it!
The third credit hack is to request a credit limit increase. And you might be thinking, didn’t you just talk about paying down credit card debts? Why would you want to apply for a credit limit increase? Just because you have the extra money does not mean you should be spending it. This is what we call your credit to debt ratio. How much credit do you have available to you and how much of that credit have you used. Let’s say that your current credit card has a $1,000 limit on it. And let’s say that you have $700 of borrowed money against that credit card. That means that you have a 70% credit card utilization rate. Now let’s say that the bank gave you a $10,000 credit card and you have this same $700 on it. Now you have a 7% credit card utilization rate. See the difference?
Are you… Authorized?
The fourth point is pretty cool. You surely have a good friend or family member with good credit. Ask them to become an authorized credit card user on your card. This means you have a card and they have a name on it. It’s a great way to build your credit. In doing so you can actually help boost their credit score too. As long as you have consistent payment, you can improve your credit score fast. Of course, you have to be very trustworthy.
No one wants to hurt their credit because of your spending habits. If you don’t trust yourself, ask to be added to their card. And do not take any of their card information. Just add your name and thank us later! But take advantage of being able to have an account that’s in good standing. Doing that can be the difference between getting approved for your mortgage and not getting approved for your mortgage. It won’t boost your credit score overnight but it will help a lot!
The fifth tip is to be strategic about how you pay your credit cards. If you want to increase your credit score, this is how you do it! Now you might be saying, “I have $2,000 limit on my credit card and I use $500 a month to pay for necessities. Things like groceries, gas, and some of my utility bills. But I pay it off at the beginning of every single month when the credit card is due. And I always pay my bill on time.” Well, if that’s the case, you’re doing great so far! Now consider this… Pay it off early. What’s the difference you ask? Your using the card and paying the bill before it’s even due. That gives it a big fat zero balance which is going to help you boost your credit score again.
Be in the know!
So these five tips are really easy and simple things that you can do right now. You may not be able to boost your credit score overnight but it can happen quickly. Drop us a note in the comment section and let us know if you have other tips for readers. These ones are our top 5 but there are lots of ways to improve credit without waiting years.
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