When you think about the most important aspects of your financial well-being you
probably think of your retirement account or how many streams of income
you possess well there are a ton of components that make up your financial
health one that is often overlooked as your credit having a low credit score
can impact all aspects of your life and if you're in this position then you're
in luck because in this video I will share with you nine tricks to improve
your credit fast and if you're new to the channel then hit the subscribe
button below for more life-changing content before we get into how to
improve your credit score fast let's briefly go over why your credit score is
important if your credit score is not the best you'll quickly see how it
affects your financial situation from higher interest rates on your credit
cards to your eligibility for mortgage not having an adequate credit score will
cost you more in the long term and it'll take you longer to pay off your debts
not to mention having poor credit can also restrict you from getting certain
jobs being accepted as a tenant by the landlord and even getting a cell phone
plan suffice it to say maintaining a good credit score is extremely important
unfortunately most people really have no idea what a credit score is let alone
knowing how to improve it luckily credit scores aren't that
complicated and there are several simple strategies which I will teach you in
this video that you can use to have a pristine credit score but what is a good
credit score you may be thinking credit scores range from 300 to 850 here's how
they break down excellent is 800 850 very good is 742 799 good is 672 739
fair is 582 669 and poor is 579 and below so regardless of your credit score
there's always room for improvement in fact only 1.2 percent of Americans
have a perfect credit score of 850 so don't feel bad if you have some work to
do now what makes up your credit score your credit score is made up of five
basic components here's a look at how much you have your credit score is based
on each one payment history which is 35 percent of your credit score relates to
whether or not you pay your bills on time the second element is your amount
owing and this makes up 30% of your or essentially this element takes into
account how much of your total available credit you are using for instance if you
have ten thousand dollars of credit available it is better to have a balance
of a thousand dollars send five thousand dollars the third element is the length
of your credit history which makes up fifteen percent of your score this
element consists of how long you've had credit granted to you which is why it is
generally recommended to leave your credit card accounts open even if you
don't use them anymore the fourth element is new credit and it makes up
10% of your score in short every time you apply for new credit a hard inquiry
is performed which can temporarily reduce your credit score which is why it
is recommended that you don't open up to many new credit cards or lines of credit
before you need to use your credit score to get other financing or a mortgage the
fifth element is the types of credit in use and it is the final 10% of the
credit score equation essentially the more types of credit you have access to
the better you will score in this final 10% however given how small of a
proportion this equates to you shouldn't worry if you don't have all the types of
credit that exist now there are some minor ways to improve these components
like increasing the length of your credit history for each line of credit
you have or avoiding getting too many new credit cards at once so your score
doesn't drop moreover you could take out a personal loan to make your credit mix
look better but that cost money and won't have a big impact in short there
are some things you can do that eventually increase your credit score
but to do it faster and raise your score higher the key is to reduce your credit
utilization ratio the credit utilization ratio represents how much of your
available credit you actually use to get the number divided what you owe on a
card or all of them by the credit limit for that card or the total for all of
them for example suppose you have two credit cards you charge $3,000 in a card
with a credit limit of $4,000 and $1000 on your other card which has a limit of
six thousand dollars in that case you have a ratio of 75% for the first card
and 40% overall since you're using four thousand of your $10,000 total available
credit both ratios affect your score many experts suggest keeping your ratio
no higher than 30% or so and you should definitely
the dreaded maxing out of your credit cards maxing out your credit cards puts
you credit utilization ratio at a hundred percent and that's not a
position you want to be in the bottom line is that for a higher credit score
you should get your credit utilization ratio as low as possible but reducing
what you owe and increasing your available credit and if you want to
improve your credit score as fast as possible then here are nine ways to do
just that number one pay balances at the right
time your credit utilization ratio is calculated using the balances you have
at the time your credit card issuers report to credit bureaus what I
recommend is to call your credit card issuer to see when that is and adjust
your payments accordingly for example when I was trying to optimize my credit
I called the issuer of one of my Visa cards and was told that they report
information on the second of each month since I typically pay off my balances
toward the end of every month I end up with a very low ratio because by the
second I haven't had time to charge much on my card if I paid around the third of
each month however they will be reporting my balances at their highest
point in the month I eat the day before I pay making my ratio higher paying
shortly before the information is reported is the best strategy doing this
might involve timing payments differently for different cards
however if figuring that out sounds like too much trouble try the next suggestion
number two pay twice monthly if you don't want to bother with tracking when
each card should be paid you can pay twice monthly so your average balances
always lower on each card now when I first got this advice I felt like it
would be too much of a hassle to remember to pay down my debts twice a
month luckily however we live in a world where just about anything could be
automated so I set up automatic payments from a checking account to my credit
card issuer to ensure I never missed a payment number three balance your card
use if you charge $1000 on a card with a two thousand dollar limit and charge
nothing on three similar cards your overall credit utilization ratio might
be 12.5% but it will be 50 percent for that one card and that will hurt your
score to avoid this note the credit limit for each card and when you've
reached 20 percent of the limit put the card away and use another
sure doing so will require you to make multiple payments on multiple cards but
as I just went over this doesn't have to take any extra effort if you automate
your payment's number four set up alerts you're probably already receiving
useless notifications on your phone from apps like Facebook and Instagram so why
not set up some alerts that will improve your financial health
many credit card issuers let you set up email alerts related to your spending if
yours does set it so you can get an email when your balance reaches 20% of
the cards credit limit once you get that email you can start using another card
or pay down the balance before charging more number five spend less on your
cards this is perhaps the most obvious way to lower your credit card balances
make it a habit to spend less overall or just move T's in cash when you get past
a certain threshold utilization ratio like 20% what I've done in the past when
trying to improve my credit quickly was to take out money from my bank every
month and when I would receive my credit card alert saying that I have reached my
utilization target I would then switch to paying with cash to ensure I didn't
over utilize my credit cards number six sign up for more credit cards
suppose your credit card limits total $10,000 and you owe four thousand
dollars you have a credit utilization ratio of 40% which is not good and your
credit score will reflect that but without reducing your debt one penny you
can reduce your credit utilization ratio to 20% by simply getting another card
with a ten thousand dollar limit or several more that add up to that much
now will having numerous credit cards in your name hurt you in any way the answer
as it pertains to your credit is no unless you get them all in a short
period of time however if you are prone to overspending then this method
shouldn't be employed until you have your spending under control number seven
don't close too many cards you probably should close credit card accounts if the
cards have annual fees but otherwise it may make more sense to just put them
away and not use them closing them reduces your available credit
automatically increasing your credit utilization ratio if you don't trust
yourself with that much available credit you might want to leave the accounts
open but cut up the cards so you have the credit lines but can't use them you
the only downside to the strategy is that after a year or two the issuer may
cancel your cards due to inactivity number eight ask issuers to raise your
credit limits perhaps the easiest way to expand the credit you have available and
reduce that key ratio is to get the limits on your existing cards increased
the only catch is that when you request an increase your issuer might do what's
called a hard inquiry which can knock a couple points off your credit score
before taking this step ask your credit card issuer if you're requesting a
credit limit increase will result in a hard inquiry and also ask if you are
likely to get the increase it's probably worth losing a few points if you can get
a substantial credit line increase since you may have very well boosted your
score by many more points for your effort number nine
keep your cards octive after you've had credit cards for years it can be easy to
forget about them and on several occasions I've had cards cancelled due
to inactivity unfortunately in one particular
circumstance the card that was cancelled had a ten thousand dollar limit and was
my oldest card my credit score fell due to both the resulting higher credit
utilization ratio and a shortening of my average credit history to keep this from
happening put each unused credit card in an envelope with the last day you used
it written on the outside when it gets close to a year take the card out and
use it for one of your regular purchases then pay off the balance in full and
store away the card for another year by doing this you will never have to worry
about having your credit cards cancelled on you which will allow you to maintain
a better credit utilization ratio and an overall better credit score thanks for
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