7 Simple Hacks for Building Better Credit

Believe it or not, there are a few things you can do to quickly boost your credit.

Sure, credit-scoring models are complicated (all that algorithm-ing and such). But, when you get right down to it, the secret sauce to building good credit is actually pretty straightforward: Take a whole bunch of on-time loan payments, keep a pinch of debt, stir in some new accounts, and let the thing bake. Seriously — building and rebuilding credit takes some time.

Still, there are a few seriously simple ways to hack your credit. And while they’re no substitute for the good old traditional recipe, these maneuvers could give a so-so credit score a quick boost. (Not sure if you need one? You can see where you stand by viewing two of your free credit scores, updated every 14 days, on Credit.com.)

Here are a few ways to hack your credit score.

1. Pay Off Big Credit Card Balances

Because if you’ve got ’em, there’s a good chance they’re messing with your credit utilization ratio. That’s how much debt you’re carrying versus your total credit. It’s recommended you keep that ratio below at least 30%, and ideally 10%, of your limits. So paying off purchases putting you over that threshold — in total and on individual cards — can help.

2. Ask for a Credit Limit Increase

If you can’t address those balances right away or you’re saddled with a seriously low credit limit, you can ask your issuer to up your limit. Some notes before you do: They’ll likely pull your credit to see if you can handle the increase. If your credit is bad, you might be met with a resounding “no.” Whether approved or denied, that credit pull will leave a hard inquiry, which will cost your score a few points. That ding is worthwhile if you get what you’re asking for but less so if you don’t. You can find more on asking for a higher credit limit here.

3. Become an Authorized User

Consider this a credit card with training wheels. Authorized users, who are added to an existing credit cardholder’s account, get credit for using that card, even though they’re not responsible for making payments. In other words: You can capitalize on a loved one’s good credit and, if things take a turn for the worse, you can ask to be removed from the account and have it scrubbed from your credit report.

4. Look for Errors

The hack here, sadly, is that you might have a mistake needlessly bringing down your score. According to the Federal Trade Commission, one in five people do. If you’re among them, be sure to dispute the misinformation with the credit bureau in question (here’s how). Your credit score will likely thank you for it. (FYI: You can do a complete credit check by pulling your free annual credit report from each of the major consumer credit reporting agencies at AnnualCreditReport.com.)

5. Open a New Account

OK, bear with us here for a second, because we’re not suggesting you take on financing you can’t afford. That’s a terrible idea. We are trying to draw attention to a very important nuance of credit scores: They reward you for responsibly managing different types of credit. So, if all you’ve got is a student loan, getting a credit card could ultimately improve your score. And if all you’ve got is a credit card, taking out an installment loan, like an auto loan or mortgage, could do the same — though in that scenario, you’d definitely be upping your debt load, so it’s best to only add that financing as you actually need (and can afford) it.

6. Group Your Credit Applications

Most credit scoring models group credit inquiries for like financing as one hit to allow you to comparison shop. (It’s technically called de-duplication.) So, if it is time to add a mortgage or auto loan, make sure you keep all applications within a 30- to 45-day window. Credit cards are a different story — each one of those can generally be held against you, though VantageScore does group all inquiries made in a 14-day window.

7. Keep Old Credit Cards Open

It can be tempting to formally close those old credit cards that got you into trouble in the first place. But don’t make that call quite so fast. Closing a credit card can hurt your credit utilization rate and, you guessed it, your credit score. Leaving that card open, on the other hand, could help your score out, especially if you’ve sworn off using its limit. There may be times when closing a credit card is, in fact, the right call, but carefully consider your options (can you simply put the thing on ice?) before officially cutting ties.

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The post 7 Simple Hacks for Building Better Credit appeared first on Credit.com.

5 Ways to Jumpstart Your Credit Score in 2017

Building good credit can take awhile, but there are some steps you can take to jumpstart your credit score.

Improving your credit score is usually considered a lengthy project. Many factors that contribute to a good credit score — such as payment history and age of accounts — take time to establish. And if you have no credit history or a poor credit score, your best bet for credit improvement may be to establish a long-term plan for establishing good credit habits.

But if you’re thinking about applying for, say,  a mortgage in the new year or have another financing need on deck in early 2017, you may want to know how to quickly improve your credit score in 30 days or less. While no activity is guaranteed to improve your credit within a time frame that short, there are quick, simple actions you can take to try for fast results. Here are a few ways to jumpstart your credit score. 

1. Become an Authorized User

“One tried-and-true trick is to have someone with great credit add you as an authorized user to a card that they’ve had for a long time,” says Casey Fleming, author of The Loan Guide: How to Get the Best Possible Mortgage.

Using this method, you can piggyback off someone else’s good credit. Authorized users benefit from responsibly managed accounts because these accounts will be listed on the user’s credit report. But both you and the account holder need to be wary – if they aren’t as financially responsible as you think, or if they use their card irresponsibly, your plan can backfire and both credit scores could suffer. (Note: Authorized users can request delinquent accounts be removed from their credit reports; primary cardholders not-so-much, so be sure you’re not overcharging.) 

2. Request a Credit Limit Increase

You can ask your credit card providers to increase the limits on all the cards you own. If you have a history of timely payments with your credit card provider, there’s a good chance they will negotiate. By increasing your credit limits, you’ll be improving your credit utilization rate, which is the amount of debt you’re carrying versus your total credit limits — and is a major contributing factor to your credit score.

Note: This will only work if you don’t increase your spending. If your credit card issuer raises your limit by $1,000, and you immediately start racking up charges that eat up the difference, the increased limit won’t do much good. Experts recommend keeping your credit card usage at no more than 30%, with an ideal balance at 10%. (You can check your credit utilization rate by viewing two of your free credit scores on Credit.com.)

Keep in mind, too, a request for a credit limit increase could result in a hard inquiry on your credit report, which can ding your credit scores, so use this strategy carefully.

3. Pay Down Your Cards

To the point above, your credit utilization rate will also improve if you pay down your credit card balances. If you have some extra funds, consider making extra payments on your credit card rather than dropping $100 at Chili’s this weekend. Doing the former can make a real difference and is a decision you’re unlikely to regret.

“Paying down your credit card balances to under 30% of the limits” will net results, says Fleming.  

4. Check for Credit Report Errors 

There could be an error on your credit reports that are weighing your scores down — and, is so, its removal could quickly improve your standing. You can pull your credit reports for free each year at AnnualCreditReport.com. If something is amiss, be sure to dispute it with the credit reporting agency in question. Most credit report disputes must be resolved in 30 days; a few can take up to 45 days. You can learn more about disputing errors on your credit report here.

5. Ask About Rapid Rescoring

If you’re applying for a mortgage, one lesser-known trick is to ask your lender about a rapid rescore. Rapid rescoring services are usually provided by mortgage lenders when applicants are on the cusp of qualifying for a better interest rate.

Rapid rescoring can to help update credit reports or fix errors quickly. If you recently paid off a debt, or have proof that a negative item on your credit report is inaccurate, you can provide that documentation to the lender. The lender will then request a rapid rescore on your behalf, and either absorb the cost or pass it on to you. You’ll want to ask your lender ahead of time whether you should expect charges for the service. 

“If you are working with a mortgage company for a loan, they would handle this for you and it should not [drastically] mark up the costs,” says Tal Frank, president of PhysicianLoans, a niche mortgage company. “The rescore is the quickest way to see a change in your score once balances have been paid down and repairs have been made. It can be as quick as a one- or two-day turnaround time.”

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