9 Ways to Increase Your Credit Score by Up to 100 Points
Your credit score is a key factor that affects many aspects of your financial life, from securing a mortgage to getting favorable interest rates. Many factors can impact your score—some of which might even surprise you. Some strategies may seem counterintuitive at first, but following these steps can help improve your credit score by up to 100 points. Here’s what you need to know:
- Keep Your Credit Card Balances Below 10% of Your Credit Limit
One of the most impactful things you can do to boost your credit score is to keep your credit card balances low. Ideally, your credit utilization ratio (the amount of credit you’re using compared to your total credit limit) should be kept below 10%. For example, if your credit limit is $1,000, aim to keep your balance under $100. When you lower your balance, you reduce your credit utilization, which can improve your credit score. Not only will paying down your balances increase your available credit, but it also signals to creditors that you manage debt responsibly.
- Do NOT Close Paid-Off Credit Card Accounts
When you pay off a credit card, you might be tempted to close the account. However, closing a credit card account—especially one that has a long history—can hurt your credit score. The reason is that your credit history length and the total amount of available credit both influence your score. By keeping the account open, you preserve the length of your credit history and avoid reducing your overall credit limit, both of which positively impact your credit score.
- Avoid Personal Loans with Finance Companies
Personal loans from finance companies often come with high-interest rates and short repayment terms. These loans can be more difficult to pay off, and even if you have a perfect repayment history, they do not typically benefit your credit score as much as other types of credit accounts. To improve your score, consider using credit cards or installment loans that offer more favorable terms.
- Open a Regular or Secured Credit Card
If you’re new to credit or don’t have much of a credit history, opening a regular or secured credit card can be a great way to start building your score. A secured credit card requires a deposit as collateral, but it functions like a traditional credit card. Keeping your balance low—ideally 10% of your limit or less—will help demonstrate that you can manage credit responsibly. If you’re diligent about paying your bills on time, you could see a noticeable improvement in your credit score within 60 days.
- Become an Authorized User on Your Spouse’s Credit Card
If your spouse has an excellent credit history, you could ask to be added as an authorized user on one of their credit card accounts. This can help boost your credit score because the account’s positive history will be reflected on your credit report, even though you’re not the primary account holder. For this to be effective, the credit card should have a low balance (less than 66% of its limit) and a good payment history.
- Pay Off Judgments or Tax Liens
Having judgments or tax liens on your credit report can significantly lower your score. However, if you pay off these accounts, you can have them removed from your credit report, which may result in a score increase of 50 points or more. It’s essential to ensure that any derogatory marks are properly removed once they’ve been settled.
- Check the Last Reported Activity Date on Older Collections
Before you pay off an older collection account, check the last reported activity date. If the account hasn’t had any activity in the last 12 months, paying it off could trigger “new activity” on an old derogatory account. This could temporarily lower your credit score. It’s often better to leave older collections untouched if they haven’t affected your credit in a while, but be sure to check with a credit expert for advice on how to handle them.
- Opt-Out of Unsolicited Credit Offers
Unsolicited credit offers can negatively impact your credit score by increasing the likelihood of hard inquiries on your report. To prevent this, you can opt out of receiving credit offers by visiting www.optoutprescreen.com. This simple step can improve your score by 1 to 20 points, and it takes only a few minutes to complete.
- Never Let Student Loans Become Delinquent
Student loans are a major part of many people’s financial lives, but letting them become delinquent can severely damage your credit score. If you miss payments or default on your federal student loans, it can lead to wage garnishment, tax refunds being withheld, and long-term damage to your credit report. To avoid these issues, set up automatic payments or speak with your loan servicer about deferment or forbearance options if you’re struggling.
These are general recommendations, and some tips may not apply to your specific credit situation. It’s always best to seek personalized advice from a credit professional.
Call Prost Mortgage Group for a Free Personal Credit Review
Your credit score plays a crucial role in determining your borrowing power. At Prost Mortgage Group, we offer free personal credit reviews to help you develop a strategic plan for improving your score. With the right approach, you can increase your credit score and maximize your financial potential. Contact us today at (859) 795-1316.
Prost Mortgage Group & Success Mortgage Partners, Inc. supports Equal Housing Opportunity. NMLS ID# 130562. This is informational only and is not an offer of credit or commitment to lend. Contact Success Mortgage Partners, Inc. to learn more about your eligibility for its mortgage products. Please consult with a qualified credit counseling agency for credit advice.