What can a higher credit score do for you? A lot, in fact.
The higher your credit score, the more likely a lender will say yes when you want to borrow money, whether in the form of a new credit card, personal loan or mortgage. . And, a higher credit score could be your ticket to a more competitive interest rate on a loan.
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If your credit score needs improvement, you’ll often hear that paying your bills on time is the best way to improve it. And that’s solid advice. Your payment history carries more weight than any other factor when calculating your credit score.
But that’s not the only thing you can do to boost your credit score. You can also use these lesser known tricks to increase this number.
1. Get a secure credit card
With a regular credit card, you have a spending limit against which you can charge expenses. With a secured credit card, you determine your spending limit by putting down a deposit which acts as a limit. Or, to put it another way, your deposit secures your line of credit.
A secured credit card will not necessarily give you much more purchasing power. This is because you only charge expenses against the money you already have. But if you pay this secured card on time every month, it can help boost your credit score.
2. Check your credit report
Your credit report is a summary of your credit and borrowing history. It shows the different accounts you have opened, the amount of your debts and the different types of debts in your name.
But credit reports are not error-proof. And if yours contains an error that makes you seem like a less desirable borrower, correcting that error could lead to an increase in your credit score.
So, let’s say your credit report lists a debt in your name that you never incurred. If you dispute this error, the credit bureau behind this report is obligated to review it. And if it finds that it was in fact a mistake, your credit score could be improved.
3. Get your credit limit increased
Another factor that goes into your credit score is your credit utilization rate, which measures how much of your available revolving credit you are using at one time. A ratio of 30% or less is generally considered favorable, so if yours is higher, paying off some credit card debt could help improve your credit score.
But that’s not the only way to lower your credit utilization rate. You can also reduce this ratio by increasing your credit limit.
So let’s say you owe $4,000 against a spending limit of $10,000 on your credit cards. This is a utilization rate of 40%. If you manage to increase your spending limit to $14,000, you reduce your usage to around 29%, which could help your credit score increase. And if you have an account in good standing, chances are a simple call to your credit card companies will result in a spending limit increase.
Paying your bills on time isn’t the only thing you can do to improve your credit score. These tips could also help you increase that number and open the door to more borrowing choices.
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