Hacks For Better Credit.
Are you ready to see better results on your credit report? Do you want to make a big purchase, like a house or car, but feel limited by your current credit?
There are simple ways to keep erroneous incidents off your report and make sure that financial institutions see you as responsible and reliable as possible. These hacks – which are all completely legal! – can help to improve your credit report starting today!
Don’t max out your credit cards
Maxing out your cards makes it look like you’re financially irresponsible. In fact, as far as your credit score is concerned, you should use as little of your available credit limit as possible. Although some personal finance experts say it’s fine to use up to 30 percent of your available credit, it’s best to stay under that, if you’re looking to improve your credit score.
According to Credit Sesame credit expert John Ulzheimer, “Thirty percent is not necessarily the best percentage. If you want to earn the maximum number of credit score points, aim to keep your your credit card usage to 10 percent or less of your credit limit and your score will reap the benefits.” (This is also why it’s important to keep old accounts open even if you don’t use them. The untapped credit on those accounts only helps to lower your balance to available credit ratio.)
Don’t close credit cards
Unless you want to avoid paying a costly annual fee for a credit card you hardly use, it makes sense to keep unused credit cards open. The unused credit limit helps to maintain a lower debt-to-limit ratio.
Tip: You can also improve your credit scores by paying down some of your debt while increasing the credit limits on one or more of your cards. The combination of the two will also yield a lower debt-to-limit ratio because you’ve decreased your balances and increased your limits.
Limit the number of credit cards you apply for
Having too many credit cards can backfire on you. Every time you apply for a new card, an inquiry is made into your account to see if you’re creditworthy. With each application, your score is docked a few points. And it’s not just the inquiry that impacts your score — new account openings can also shorten your overall length of credit history, and any new balances you charge will impact your debt usage — both of which are factors that contribute to your credit score calculation.
So in order to keep your credit score from trending downward, only sign up for cards that actually work with your spending habits and avoid having more than three cards in your wallet.
Make sure your credit report is accurate
Sometimes there are errors made on your credit report, in which case, you need to take the proper steps, like writing a letter to the credit bureau to have it removed. Thanks to the Fair Credit Reporting Act, you can ask that the questionable transaction on your credit report be “verified.”
You would simply ask the credit bureaus to verify the accuracy of the item and if they can’t within 30 days, then they have to remove it.
– via www.creditsesame.com
Can’t Get A Credit Card? Use the Buddy System
Let’s say you want to get a credit card to improve your credit report, but you can’t get approved – either your current credit is too low, or you don’t have a credit score at all!
Don’t worry, this happens to tons of people, and there are ways around it. One of the best is the buddy system – essentially borrowing the good credit of someone who trusts you in order to start building your own.
If you have no credit or can’t get a credit card on your own, explore the option of becoming an authorized user on a credit card. What you do is ask a primary cardholder, like a family member or significant other, if you can get an authorized card in your name on their account. Keep in mind that some scoring systems may give less weight to authorized user accounts than they do to primary accounts, but you would still stand to benefit from them.
While this can be a great way to add payment history to your credit file, it can be a delicate, high-stakes strategy. First, the primary cardholder must be willing to add you to his or her account, and even though this person can be anyone, you should only tie your credit to someone you deeply trust.
This is especially important for the primary cardholder. If you add an authorized user to your credit card account, and that user runs up a huge bill, you’re held accountable for it, and your credit score will be affected by the high debt levels or missed payments.
Adding your child as an authorized user on your account can help them build credit from a young age. In fact, the authorized user gets credit for the whole account history, not just the point from which they’re added to it. Not only does that establish a credit history, it increases the average age of accounts on your credit report, which is also an important factor in credit scoring.
Primary cardholders should keep in mind that their actions will affect that user. You don’t want to trash your kid’s credit by adding them as an authorized user to an account that’s maxed out or delinquent.
– via ABC News
Have you ever seen suspicious activity on your credit report? What are you doing to improve your credit report?