It can feel overwhelming to build credit, but these three tips and tricks can help you quickly get back on track.
1. Don’t close credit cards you’re not using.
You can cut them up so you can’t use them anymore, but let them keep reporting. Credit bureaus see the extra available credit which helps build your score.
Earlier this week we had a client call whose usage was in the high 30s. Even though that isn’t much higher than the ideal, it still impacted his credit score and bumped him down a tier, making him pay higher rates and potentially decreasing his loan to value with major lenders.
He had other credit cards available, but he closed those accounts. By closing them, he decreased the available credit overall which made his usage percentage go up and his credit score go down.
If he had only left those credit cards open, he would have kept a much higher available credit which would have brought his usage numbers down.
2. Increase your limits to build credit.
You can also call and ask your credit card companies to increase your available credit. Since credit scores are based on the ratio of usage to available balance, raising the ceiling builds your credit.
It’s important to remember that increased limits don’t show on your credit reports until your next statements cycle. If you’re desperate to raise your score, look at when your next statement is issued to avoid panic.
3. Protect your credit through private investments.
By finding individuals in your community who are willing to invest in you, you can build your credit through avoiding credit cards. Paying cash helps you avoid raising your usage number.
It doesn’t take a millionaire to make this happen. Even ordinary people who have $20,000-$50,000 can make a significant difference.
You’re helping them, and they’re helping you, because they’re not going to find an 8-9% rate anywhere else. Just make sure you take care of their investment by properly securing it.
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