To be clear, these are three suggestions of how to boost your credit score in unconventional ways, but it's still important to use good common-sense practices. These are no substitute for responsible credit behavior If the account owner starts making late payments or maxes out the card, being added as an authorized user can easily do more harm than good. Being added as an authorized user is only a good thing if the primary account holder makes the payments on time and doesn't carry an excessive balance. credit card issuers report account status to the three credit bureaus on behalf of authorized users, so this can be a smart way to boost your credit score. If this is the case, one credit hack you may want to try is to have a trusted friend or relative add you as an authorized user on an established credit card account. If you're just trying to establish or rebuild your credit, it can be challenging to get approved for a credit card. Not only that, but there's a good chance you'll find a personal loan with a significantly lower interest rate than you're paying on credit cards, plus the rate will be fixed over the term of the loan. Therefore, by obtaining a personal loan (installment debt) to consolidate your credit card debt, you can significantly boost your score. One important principle to know is that installment loans are generally regarded more favorably in the FICO formula than revolving debts such as credit cards. ![]() Speaking of debts, I briefly mentioned that there are two main types - revolving and installment. ![]() Get a personal loan to consolidate credit card debt Most people who do this are successful, and you'll get the benefit of lower credit utilization without the negative effects that come with applying for and opening new credit accounts. This can have a dramatic effect on your credit score, so one strategy is to simply ask your current creditors to increase your limits. On the other hand, if you have $10,000 in credit limits, your utilization drops to just 20% even though you owe the same amount of money. If you owe $2,000 on your credit cards and have credit limits totaling $5,000, you are using 40% of your available credit. Alternatively, you can get more available credit. Most obviously, you could pay down your debts. When it comes to reducing your revolving account usage (also known as your credit utilization), there are two options. This has less to do with the actual dollar amounts you owe than it does with the amounts you owe on revolving accounts relative to your credit limits, and how much you owe on installment loans relative to their original balances. We know that 30% of the FICO scoring formula comes from the "amounts owed" category. ![]() More: Save while you pay off debt with one of these top-rated balance transfer credit cards 1. Save: This credit card has one of the longest intro 0% interest periods around
0 Comments
Leave a Reply. |