Nowadays, any major purchase decision that involves finding a loan of some kind, such as one for a house or a car, involves a credit-based decision. The lender will look at the person’s credit history and assess whether the credit score makes that person a good candidate for the loan. Nowadays, even employers are looking at credit scores. Personally, I don’t think there’s a big relationship between spending habits and work performance, but employers and other lending companies use this tool for the same purpose – to reduce risk.
Now that you understand that it’s important to be aware of your credit scores. It is even more important to take the necessary steps to: Increase your credit score as much and as quickly as possible:
1) Keep non-mortgage debt below 10% of lines of credit
This is probably the most difficult step to reach these peaks in the 800+ range. In the past, I had a score in the early 700s. I had the usual loan profile, consisting of a mortgage, credit card debt, and some other forms of debt (e.g., car loans and home equity line of credit). After a while, I paid off all the debt except for the mortgage. In your opinion, what influence did this have on my credit rating? In about a month that all debts were repaid, my score averaged about 800 out of the 3 credit reference agencies. While it’s not always possible to repay all of your debt. As long as you keep your debt at less than 10% of your total line of credit, your scores will benefit greatly.
2) Borrow credit (also known as piggybacking)
This was a popular technique a few years ago. When I mentioned this to some people recently, they said they hadn’t heard of it yet. This strategy is very easy to implement. To do this, you need the help of a family member or a friend who has excellent credit and trusts you. So, what do you do? They ask them to add you as an authorized user to one of their oldest credit cards or accounts. The ideal number for this strategy to work is two or three accounts. Why does it work? When you’re added to someone else’s credit account, you’re essentially inheriting their credit history as well. This works wonders for Increase your credit score and it works quickly (within 30-60 days).
There are a number of other tips and tricks you can use to increase your credit score.
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Wendy is now a financial analyst and writer. Wendy has been writing about finance and personal finance since she was a sophomore in high school. She has also been writing for several online publications and published in The Huffington Post, and Forbes Woman.
Wendy is a credentialed financial analyst and has experience working with financial institutions and businesses. Wendy is also a certified financial planner. When Wendy's not writing, she enjoys tending to her many plants, watching TV, and spending time with her family.
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