Money Smarts Blog
Part 3 of 4: How to Raise Your Credit Score in '23
Jul 10, 2023 || Cherish Saathoff, Legal and Recovery Specialist
A big round of applause for those of you still following my year-long series on ways to improve your credit score! Hopefully you’ve seen a noticeable boost by using some of the strategies we’ve already outlined. For example, last issue we touched on the impact of late payments, along with a few different types of debt consolidation.
Review your statements
Knowledge is power. Understanding your monthly statements will help you see where your money’s going and help you figure out where to pull back a little in the spending department. It can also help you find errors, like I recently found on my home equity line of credit (HELOC) statement through one of the big national banks. Because I’m pretty diligent about keeping track, I spotted the mistake and called the bank right away to point it out and have it corrected. I felt like David taking on Goliath! It can be a pain, but it’s well worth it to make sure you’re not paying unnecessary interest or fees.
Become an authorized user
Even with lackluster credit, you can rebuild — particularly if you have a family member or friend with excellent credit and willing to add you as an authorized user on their card. The cardholder will need to contact their financial institution or card issuer to start the process, and you’ll receive a card connected to their account once you’re approved. You don’t even have to use the card; just being linked to the account will benefit your profile since you’re now part of that good credit history. Just don’t abuse the privilege!
Keep your utilization rate down
Here’s a neat little hack: Pay down your card’s balance before the billing period ends to help keep your utilization ratio down. (Remember, your credit utilization ratio is the amount of revolving credit you’re currently using divided by the total available credit, all expressed as a percentage.)
Why does this help? Because once you receive your statement, the amount you owe will be reported to the three major credit bureaus and impact your credit score. So, if the amount on your bill is lower, it’ll bring your overall utilization ratio down.
Pay more than the minimum
Make every effort to pay your credit card balance in full every month, and certainly more than the minimum payment. Let’s say you owe $1,500 at 18% APR with a $30 minimum payment. Assuming you’re not racking up additional monthly charges, it’ll take you 94 months and an extra $1,293 in interest, according to our How Long Will It Take To Pay Off a Credit Card? calculator. But if you double your minimum payment to $60, you’ll pay off your balance 62 months earlier and only pay an extra $394 in interest!
Get credit for the bills you already pay
If you’re looking to build long-term credit health, give Experian Boost a try. Once you’ve connected your bank, credit card or service provider, Boost will look through two years of payment history (online rent payments, phone bills, utilities and more) for positive, qualifying payments and add them to your credit file. It’s fast and free, and you could see your FICO® Score boost instantly.
Just like Rome wasn’t built in a day, credit scores aren’t built overnight. But with some dedication and patience, you should notice a significant improvement in a (relatively) short amount of time.
Part 3 of 4: How to Raise Your Credit Score in '23
Jul 10, 2023 || Cherish Saathoff, Legal and Recovery Specialist
A big round of applause for those of you still following my year-long series on ways to improve your credit score! Hopefully you’ve seen a noticeable boost by using some of the strategies we’ve already outlined. For example, last issue we touched on the impact of late payments, along with a few different types of debt consolidation.
Review your statements
Knowledge is power. Understanding your monthly statements will help you see where your money’s going and help you figure out where to pull back a little in the spending department. It can also help you find errors, like I recently found on my home equity line of credit (HELOC) statement through one of the big national banks. Because I’m pretty diligent about keeping track, I spotted the mistake and called the bank right away to point it out and have it corrected. I felt like David taking on Goliath! It can be a pain, but it’s well worth it to make sure you’re not paying unnecessary interest or fees.
Become an authorized user
Even with lackluster credit, you can rebuild — particularly if you have a family member or friend with excellent credit and willing to add you as an authorized user on their card. The cardholder will need to contact their financial institution or card issuer to start the process, and you’ll receive a card connected to their account once you’re approved. You don’t even have to use the card; just being linked to the account will benefit your profile since you’re now part of that good credit history. Just don’t abuse the privilege!
Keep your utilization rate down
Here’s a neat little hack: Pay down your card’s balance before the billing period ends to help keep your utilization ratio down. (Remember, your credit utilization ratio is the amount of revolving credit you’re currently using divided by the total available credit, all expressed as a percentage.)
Why does this help? Because once you receive your statement, the amount you owe will be reported to the three major credit bureaus and impact your credit score. So, if the amount on your bill is lower, it’ll bring your overall utilization ratio down.
Pay more than the minimum
Make every effort to pay your credit card balance in full every month, and certainly more than the minimum payment. Let’s say you owe $1,500 at 18% APR with a $30 minimum payment. Assuming you’re not racking up additional monthly charges, it’ll take you 94 months and an extra $1,293 in interest, according to our How Long Will It Take To Pay Off a Credit Card? calculator. But if you double your minimum payment to $60, you’ll pay off your balance 62 months earlier and only pay an extra $394 in interest!
Get credit for the bills you already pay
If you’re looking to build long-term credit health, give Experian Boost a try. Once you’ve connected your bank, credit card or service provider, Boost will look through two years of payment history (online rent payments, phone bills, utilities and more) for positive, qualifying payments and add them to your credit file. It’s fast and free, and you could see your FICO® Score boost instantly.
