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How I Raised My Credit Score By 150 Points

Tags: credit

It can be hard to raise your Credit score but one small negative and it seems like it drops dramatically. Or maybe you have been stuck around the same score and it won’t bump up at all. I’ve been there and it’s frustrating. Especially if you are raising your score for a big purchase that will rely a lot on your credit score. I want to share with you how I was able to raise my score quickly so that I could finally qualify for my mortgage! And if you have more suggestions to add, please post them in the comments for other people!

Some factors you can’t control, like how long you have had your account open. The longer you have had your credit card (in good standing), the better your score will look. So when you first get a credit card, your time will be below average. It could take years for it to qualify as “good”. My oldest credit line is five years and that’s average. But don’t let this worry you! It’s just how it works and this doesn’t mean we can’t raise our credit score in other ways.

Reasons Your Credit Score Is So Important!

  • If you have a bad score, you may not qualify for a loan or a mortgage.
  • If you do qualify even with a low score, the interest rate on a personal loan, car loan or mortgage will be high.
  •  Your score could affect your job if they check to see if you are good with money.

Pay Off Your Credit Card In Full Every Month

This is the best way to handle credit cards because while you are working on raising your score, you aren’t paying any interest. You don’t want to waste your money. I’ve heard people say that your credit score will improve faster if you leave a balance on your cards but I’ve never had a problem. Lenders just want to see that you handle money responsibly.

Even better is if you have a credit card that earns you rewards! You still get rewards if you pay off the balance every month. I love using my rewards to pay down the balance on my card. I will put a bill I was going to pay onto the card and use my rewards to lower the balance. It’s basically free money if used correctly!

Related: How To Get The Most From Your Credit Cards

Pay All Of Your Bills On Time

Even though they don’t report the on-time payments, they do report for negligence.
Your utilities, cable, phone contract or anything you are making payments on can hit your credit score if you default on your payments and it goes to a collection agency. I know it doesn’t seem fair after you pay off everything on time for years, I’m with you there. But it’s not just your credit card or car payments that can affect your score.

Pay More Than The Minimum Towards Your Debt

This includes car payments, mortgage, and student loans. It’s all counted as money that you owe, so the less you owe, the higher your score. Paying more on your debt will do wonders for your pocket later on (paying less interest) but it can also bump up your credit score quite a bit. Work a few hours of overtime, cut out unnecessary expenses, buy the cheaper products instead of brand name, or eat in more often to eliminate any debt as quickly as you can. It’s not a permanent change but just a temporary adjustment to get yourself financially free.

Related: 10 Helpful Tips To Pay Down Credit Cards

Increasing Your Credit Limit

Your credit score will drop a couple of points when you apply for a credit limit increase but as long as you don’t do it often, it’s fine. Credit card companies will often raise your credit limit after paying your bill on time for several months. My credit limit will go up every six months without me doing anything extra other than paying my bill on time. They see how well you can handle money so they give you a little more room.

If you get a huge financial bump at work, you can apply for a credit limit increase and have it raised immediately. This is either over the phone or online through the company’s website. I would only do this though if your raise was pretty significant. You want to make sure it is worth the couple point drop of your credit score and won’t raise your limit by only a little bit.

Spend Around 30% Of Your Credit Limit

Maxing out your cards will show banks that you are living above what you can afford and need the credit card to fall back on. Your credit score will drop if you max it out, instead of helping you. Before you start using your credit card, figure out what 30% of your limit is and stay below that. You need to be firm when it comes time to stop spending on your card. Use your credit card for a few bills (under your 30%) and set the money aside to pay off the balance in full every month. This will help you stay out of debt and not spend the money that was meant for that bill.

Check Your Credit Report For Any Errors

Once a year, you can pull your credit report for free to check it for errors.
You want to dispute any errors to have them taken off. This could drag your credit score down for years if you don’t take care of it. No one thinks it will happen to them but it does happen. To dispute an error, send in a letter to the credit bureau that has the error on it, stating that there is an error and you would like them to look into it. If the error shows up on all three credit bureau reports, you need to send a letter to each one. It may be a pain to dispute a mark on your credit report but once it’s removed your score will benefit greatly.

Look into the regulations when it comes to disputing anything. It will tell you the amount of time they have to respond to you. If they don’t respond to your letter within that timeframe, they legally have to take it off your report.

Lenders Want To See Different Types Of Credit On Your Account

  •  Credit Card
  •  Mortgage
  •  Car Loan
  •  Personal Loan
  •  Student Loan

Having a ton of credit cards isn’t going to help you. It’s fine to have a couple but what lenders really want to see are different types of credit. You should think about this very carefully before applying for anything. I’ve never had a car payment and don’t plan to get one in the future. I paid cash for my car because of how fast a cars value depreciates and how expensive monthly payments can be. You need to consider what the best decision is. There is nothing wrong with just sticking to a credit card if that is all you are comfortable with.

Don’t Close Out Any Credit Card Accounts

You may not use these anymore but one of the factors into your credit score is how long an account has been open. The longer they have been open while in good standing, the better it looks. So if these accounts are years old and you have no reason to close them, leave them be.

Now if they have annual fees and aren’t earning you rewards, it is understandable to close these. Don’t waste money for something you aren’t using. This is something you need to decide if it’s the right move for you.

As I stated above, my oldest credit line is five years old and that’s still only classified as average. Having a good, long history with your credit is very important to your score. Below is a picture explaining what your oldest credit line is classified as. So using my credit line, I have two more years before they consider my length of history to be good.



This post first appeared on Chasingyourpassion, please read the originial post: here

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How I Raised My Credit Score By 150 Points

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