You don't have to spend money to raise your credit score!! That's right, lots of people are of the misconception that their credit scores can't be any higher until they have more money to pay off their debt, but that simply isn't the case. There are lots of things you can do to raise your credit score without spending a dime. By following these tips you will be able to raise your credit score quickly and you don't have to know a lot about credit to put them into action. So let's get started!
Tip #1
Ask creditors to raise your credit limit
As long as you have been making your payments on time, many creditors will periodically review your account and raise your credit limit. Did you know you can typically call a creditor and ask them to raise your credit limit once every 6 months? This raises your credit score by building higher credit limits (which tells other creditors you are more trustworthy), and lowering the proportion of credit used. Some people prefer to keep their credit limits lower as a way to keep themselves from charging too much money; however, this is only hurting their credit scores.
Tip #2
Ask a friend or family member to add you as an authorized user
One of the quickest ways to add positive payment history to your account is to ask a friend or family member to make you an authorized user on their account. When you are added as an authorized user on their account all of their payment history is added to your credit file. So if they have had the account open for 10 years and have always paid on time, now you have that history in your credit file also. Your credit file will designate the account as an authorized user account. It will not show up the same way your individual accounts do, however, it can still help add some depth to your file and raise your credit score. It is also a great way to build credit if you are just starting out!
Tip #3
Do not cancel credit cards
The biggest credit mistake people make is to cancel credit cards! Especially if the credit card they are canceling has an outstanding balance. I know credit card companies can be very difficult, but before you cancel that card keep in mind how it is going to affect you and your credit. Your credit score it calculated from many different categories. One of which is credit history. If you have had this credit card for a long time and you cancel it, your credit score will be affected. Closing that account may leave you with accounts on your credit file that were all opened fairly recently. Also, the amount of available credit you have will drop and if there is a balance on the card it will skew the proportion of credit used and credit available and lower your score until the balance is paid off. So before you blow a gasket and cancel your credit card to show that credit card company who's who, consider how it will affect you and your credit score!
Tip #4
Keep credit card balance less than 30% of available credit
Okay, I know. This one may be easier said than done, but a lot of it comes down to knowing where you are at on each one of your credit cards. Let's face it. Most Americans have more than one or two credit cards in their wallet. The average American has 6 credit cards. Most of us get used to using just one or two, probably because we get frequent flier miles or rewards or something on those cards. My advice is simply this: spread the "wealth" or in this case debt. Try to keep the percentage of credit used on each one of your cards under 30% and ideally shoot for 20%. The lower you can keep this percentage the better off you will be.
Tip #5
Limit the number of times your credit is pulled
Every time your credit file is accessed by a creditor it is called an inquiry. The number and type of inquires on your credit report affect your credit score. Please note: you can access your credit report directly as often as you would like without any negative consequences, this is just in regards to creditors accessing your credit report. You can have your credit file pulled periodically up to 8 times within a 2 year period without it damaging your credit score. Inquiries will fall off of your credit report 2 years after the inquiry date. The types of inquires on your credit report are also important. If you go out and apply for a credit card, then a couple weeks later a car loan, and a couple weeks later a home equity loan, and so on and so forth a red flag is going to go up to lenders. They are going to wonder why you are trying to access so much credit all at once.
Tip #1
Ask creditors to raise your credit limit
As long as you have been making your payments on time, many creditors will periodically review your account and raise your credit limit. Did you know you can typically call a creditor and ask them to raise your credit limit once every 6 months? This raises your credit score by building higher credit limits (which tells other creditors you are more trustworthy), and lowering the proportion of credit used. Some people prefer to keep their credit limits lower as a way to keep themselves from charging too much money; however, this is only hurting their credit scores.
Tip #2
Ask a friend or family member to add you as an authorized user
One of the quickest ways to add positive payment history to your account is to ask a friend or family member to make you an authorized user on their account. When you are added as an authorized user on their account all of their payment history is added to your credit file. So if they have had the account open for 10 years and have always paid on time, now you have that history in your credit file also. Your credit file will designate the account as an authorized user account. It will not show up the same way your individual accounts do, however, it can still help add some depth to your file and raise your credit score. It is also a great way to build credit if you are just starting out!
Tip #3
Do not cancel credit cards
The biggest credit mistake people make is to cancel credit cards! Especially if the credit card they are canceling has an outstanding balance. I know credit card companies can be very difficult, but before you cancel that card keep in mind how it is going to affect you and your credit. Your credit score it calculated from many different categories. One of which is credit history. If you have had this credit card for a long time and you cancel it, your credit score will be affected. Closing that account may leave you with accounts on your credit file that were all opened fairly recently. Also, the amount of available credit you have will drop and if there is a balance on the card it will skew the proportion of credit used and credit available and lower your score until the balance is paid off. So before you blow a gasket and cancel your credit card to show that credit card company who's who, consider how it will affect you and your credit score!
Tip #4
Keep credit card balance less than 30% of available credit
Okay, I know. This one may be easier said than done, but a lot of it comes down to knowing where you are at on each one of your credit cards. Let's face it. Most Americans have more than one or two credit cards in their wallet. The average American has 6 credit cards. Most of us get used to using just one or two, probably because we get frequent flier miles or rewards or something on those cards. My advice is simply this: spread the "wealth" or in this case debt. Try to keep the percentage of credit used on each one of your cards under 30% and ideally shoot for 20%. The lower you can keep this percentage the better off you will be.
Tip #5
Limit the number of times your credit is pulled
Every time your credit file is accessed by a creditor it is called an inquiry. The number and type of inquires on your credit report affect your credit score. Please note: you can access your credit report directly as often as you would like without any negative consequences, this is just in regards to creditors accessing your credit report. You can have your credit file pulled periodically up to 8 times within a 2 year period without it damaging your credit score. Inquiries will fall off of your credit report 2 years after the inquiry date. The types of inquires on your credit report are also important. If you go out and apply for a credit card, then a couple weeks later a car loan, and a couple weeks later a home equity loan, and so on and so forth a red flag is going to go up to lenders. They are going to wonder why you are trying to access so much credit all at once.