Credit Score Improvement Tip Sept 2017

CREDIT SCORE TIP

Ask for an increased credit limit

Once you start paying off debt and lowering your overall credit to debt ratio (credit utilization), it will be easier to ask for and receive a credit limit increase. You may even find that your lenders raise your credit limit automatically as you pay off your debt. Which is a really nice gesture.

If you are unable to raise your credit limit automatically and you submit a request for an increased credit limit, be prepared to have a hard check on your credit score which can temporarily lower your credit score by a few points. However, the raised credit limit and resulting drop in credit utilization will have a bigger impact on your credit score.

The potential of a lower credit utilization will increase your credit score several points, more than making up for the few points in may drop because of the check. When requesting a credit limit increase, you may also be asked to provide proof of income, if you are making more money than previously reported to them, they are more likely to approve a credit line increase.

Always make on-time payments

While your credit utilization accounts for 30% of your credit score, making on-time payments accounts for 35% of your credit score. Try always to make sure you have submitted the minimum payment on time for all your bills, not just debt payments. This means that you pay your utilities and your rent on time as well as all those subscription services. Fortunately, even if you are few days late with a payment, most creditors don’t report late payments unless they are at least 30 days overdue.

Don’t invite lots of hard checks on your credit at once

Having lots of hard checks on your credit can lower your score. So while it might seem like a good idea to apply for lots of credit to decrease your credit utilization, doing a bunch of these at once will have a negative impact. Hard credit checks affect your credit score for 12 months. You don’t want more than a handful of hard checks on your credit each year, and ideally, it won’t be more than 1-2.

It’s is important to note that looking up your credit score can be done using a soft check that does not impact your credit score.

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