3 Credit Card Tricks That Could Boost Your Credit Score
Planning on applying for a loan or other line of credit in the near future? If so you’ll want your credit score to be as high as possible to not only improve your chances for approval but also secure you a better rate. While credit scores can’t be upgraded overnight, there are a few moves you can make to give it a small boost before having your credit pulled.
According to The Washington Post, it’s possible to raise your credit score by as much as 20 points over the course of two to three months just by changing some of the ways you use your credit cards. While some of these tips may seem odd or counter intuitive, they all take advantage of the way FICO credit scores are calculated.
on time. At 35% payment history makes up the largest chunk of your score so the subsequent tips won’t help much if you aren’t making consistent on-time payments to begin with.
The next largest factor in your score is your amount of available credit. It’s recommended that you use no more than 30% of your credit limit at any given time. Here’s where it gets tricky: this is true for each of your cards as well. To achieve this you may look into transferring some of the balance from a card with a low limit to one with a higher limit. Doing so will help you to hit that target of under 30% across the board.
Another interesting note about the 30% rule is that you might have to make payments more frequently than once a month in order to maintain it. For example, say you have a card with a $5,000 limit that you put $2,500 on each month. Even if you pay off the balance in full each time it’s due, creditors will still see that you’re using 50% of your limit on that card. Paying attention to when your cycle date ends and ensuring that your balance is low by that date can help you avoid this issue.
If you have multiple cards chances are you have a couple that you rarely use anymore. While the logical thing to do would be the cancel them, the loss of that available credit could actually ding your score in the short run. Instead it might be a good idea to make a few purchases on those cards to maintain a strong payment history on them.
Juggling credit cards certainly doesn’t sound like a financially sound technique. In fact it might seem like the last thing you would want to do while trying to polish your credit score for a loan application. However, understanding the nuances of how your score is calculated and making small adjustments in how you use your credit cards could actually improve your FICO score and help you get the best rate possible.