The Easiest Way to Raise Your Credit Score - NerdWallet
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The Easiest Way to Raise Your Credit Score

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Raising your credit score requires diligence, but we have a neat credit-building trick that requires little time and no upkeep. While it’s important to make punctual payments and stay below your limit, establishing credit doesn’t have to consume your life. Here’s a cost-free, time-efficient technique for increasing your FICO score.

Why your credit score is lower than it should be

First, you’ll need to understand two of the most influential factors impacting your credit score: amounts owed and length of credit history.

Simply enough, amounts owed means debt. High credit card debt has a negative impact on your credit score. That doesn’t mean stop using your credit card—making regular payments is one of the best ways to build creditworthiness. Just don’t let your spending get out of hand.

Everyone tells you to avoid credit card debt so you don’t earn interest. But even if you pay off your card every month, high spending can hurt your credit score. High spending raises your “debt utilization ratio,” or the ratio of your balance compared to your overall credit limit. It scares lenders if you’re consistently on the verge of exceeding your limit, and ideally you’ll want to stay below 30%. This gets tricky—and oftentimes impractical—if you have a low credit ceiling. With a $500 limit, you theoretically wouldn’t want to charge more than $150 at a time, even if you consistently pay it off.

The length of your credit history takes into consideration the age of your accounts. The older your accounts, the more reputable you seem. Account age demonstrates your experience and your fiscal responsibility. Much like people, old accounts are respected and rewarded, while young accounts are looked upon with a little trepidation.

A simple solution for better credit

Capital One Secured MasterCard Credit Card
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The best way to lift a sagging credit score is to get a secured credit card, like the Capital One® Secured MasterCard®. Since you’re probably not going to get approved for a normal credit card, the most consumer friendly alternative is to put a deposit of $250-300 upfront to get a credit line via a secured card, and prove to the bank that you can pay down the new balances you rack up on a monthly basis.

Within 6-9 months of paying off your card regularly, you’ll see your credit score rise dramatically, and you can request a normal credit card and get your deposit back. The key here is to pick a card with the lowest annual fee possible – we think $0 from the Capital One® Secured MasterCard® is quite reasonable.

If you already have fair credit

If your credit is average or fair, you may be able to stretch for a regular credit card.

Capital One QuicksilverOne Credit Card
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Two options for people with average credit are the Barclaycard Rewards MasterCard® and the Capital One® QuicksilverOne® Cash Rewards Credit Card. We prefer the Barclaycard Rewards MasterCard® even though the rewards program is less attractive (you get points instead of cash), because the card doest not have an annual fee.

No-fee credit cards require little time and little effort and can lower your debt ratio while lengthening your average account age. Before we proceed, a word of warning: Do NOT apply for a ton of credit cards all at once. Lenders find rapid expansion of your credit limit a little suspicious. Every time a lender asks about your credit history, your score gets dinged. Plus, a bunch of brand-new accounts will lower your average account age significantly, which is the exact opposite of what you’re trying to achieve. Get one card now, and wait awhile before you consider another.

Barclaycard Rewards MasterCard Credit Card
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Credit cards with no annual fees are great because they cost nothing to maintain. You can keep an account open even if you never actually use the card for purchases. Signing up boosts your overall credit limit, which in turn lowers your debt ratio (assuming you continue your regular spending habits). And once you have the card, you can keep it open indefinitely at no penalty, increasing the average age of your accounts.

There are a lot of free credit cards available for a variety of credit scores. If you already have a good rewards credit card and are looking for a supplement, you may want to make your decision based on the signing bonus. There’s no sense in looking at the rewards rate or APR if you’re not going to actually use your new no-fee card for an extended period of time. We recommend you find a high signing bonus, spend a couple months earning your cash and, bonus in pocket, revert back to your card of choice. Then you can stash away the new card and let it age.

When you apply, make sure that your debt utilization ratio is pretty low – for example, when you’ve just paid off your credit card bill.

Credit cards to boost your credit score

Whether you’re looking for a supplemental or primary card, check out our favorite no annual fee credit cards with high signing bonuses.

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  • http://twitter.com/hawaii2000 mike swanson

    Another “trick” to keep your utilization percentage low is to pay your balance in full (or at least as much as you can of it) BEFORE your monthly billing statement is generated. Then when your statement is generated, your balance will be zero (or very low). For example, say you have just one card with a limit of $2000. You could use the 30% rule and limit your total purchases in the billing cycle to $600. That seems restrictive, after all, what’s the point in having a $2k limit if you can only ever use at most 30%? If it’s a rewards card that you want to use for something like groceries and your grocery budget is $1200, sticking to the 30% rule keeps you from maximizing the rewards you could get because you’ll only use the card for half of your purchases that cycle.

    But if you can pay the balance (or most of it) before the statement is generated, you can spend any amount beyond 30% and get away with it not adversely affecting your credit score. How is this possible? It’s because the credit card companies report to the three credit reporting agencies only when that monthly statement is generated. This is key. The reporting agencies only get a monthly snapshot of your account balance. They don’t get an ongoing record of your purchases and they don’t monitor your account in real time. So in our example, you could choose to spend $1200 in groceries, 60% of your limit, but if you were to pay that amount before your statement is generated (at the end of its billing cycle), your balance will be zero when the statement is generated. The reporting agencies see the 0, not the 1200. Using this “trick” successfully means be diligent about paying that balance (and having that payment clear!) before statement time.

    Remember paying your balance before the monthly statement is generated is NOT the same as paying off your balance before its due date! Some people don’t realize that using a credit card company’s website (or 24-hour toll-free bill payment number), you can make payments whenever you want. You don’t have to wait for your billing statement and, for those who are able, this post encourages that you never do.

    • http://twitter.com/patz2009 Patrick Connor

      That can be accounted for. Bear in mind that your “high limit” is also shown on your credit reports, and may adversely affect you in some fashions. If you have the $2000 limit and you charge $1900 in a single month and pay it all off, even, your credit report will still show that you have charged that amount to the card in the past. While your “trick” does work in some respects when calculating your utilization, it’s not totally invisible from potential creditors.

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  • Colin

    As far as I’ve been able to tell, the Blue Cash Preferred card has the same application requirements as the Blue Cash Everyday. Does anyone know whether the Preferred is actually harder to get approved for, because I’d prefer that one.

    • http://www.facebook.com/thanhtung.7717 Tùng T Tran

      I think the Preferred has an annual fee and higher reward rate. I don’t think it would be much harder to get approved because at the end, it’s a fair trade.

  • http://www.unsecuredbadcreditcreditcards.com/ Bad Credit

    The first thing to do is to become informed about your situation. Take a long look at your credit report. You can get a free copy of your report, and the first thing to do is to check it for errors. These can be disputed, and winning those disputes can quickly erase negative marks on your report. Once you have looked for errors, examine the rest of the report. This is what your lenders will see when they look at your profile. Note the major problems.

    Second, work out a way to manage your payments. Set up reminders for when your credit card, mortgage, and/or auto loan payments are due. Paying on time is one of the most important factors in figuring your credit score. Don’t let something as easy as scheduling keep you locked into a bad credit score.

    Third, develop a plan to reduce your debt. Paying down credit card balances, and keeping current with payments will not only help to improve your credit score, but will contribute greatly to your peace of mind. Carrying around a lot of unpaid balances is a burden not only financially, but mentally. Total up the amount of debt you owe on your various accounts, and work up a budget that will enable you to pay off your outstanding debt in a reasonable amount of time.

    Improving your credit score will not happen overnight, but with careful planning and the continued responsible use of credit, your score will improve, and with it, your sense of freedom and peace from the worries of financial burden.

  • http://www.paydaybank.co.uk/ pay day loans

    A professional debt loan mod can be costly to organize, buy if you find the right cope for you then you can usually make that refund within the first few several weeks. To accomplish that, you will likely have to trawl through a huge variety of off-line and online mortgage companies, and also have a thorough knowing of economical law and exactly how it relates to you individually, and your business in particular.

  • http://www.paydaybank.co.uk/ pay day loans

    A professional debt loan mod can be costly to organize, buy if you find the right cope for you then you can usually make that refund within the first few several weeks. To accomplish that, you will likely have to trawl through a huge variety of off-line and online mortgage companies, and also have a thorough knowing of economical law and exactly how it relates to you individually, and your business in particular.

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  • http://nomorecreditcards.com/credit-card-relief-programs/ Credit Card Relief Experts

    Another great way to boost your credit score is to ask a family member who already has really good credit, to see if they would add you to one of their best credit cards as an authorized user, so your can have your credit score increased by piggy backing on their excellent payment history, etc..

  • http://nomorecreditcards.com/credit-card-relief-programs/ Credit Card Relief Experts

    Another great way to boost your credit score is to ask a family member who already has really good credit, to see if they would add you to one of their best credit cards as an authorized user, so your can have your credit score increased by piggy backing on their excellent payment history, etc..

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  • CSHopeful

    Hi Anisha / NerdWallet,

    I have a $500 limit unsecured credit card. I charge everything, I mean everything to it. Monthly charges total more than $700. However, I do pay my balances in full weekly or bi-weekly. Per your article above, is that going to be a problem?

  • Joe

    Question I just got a Discover It card with a $0 annual fee and had previously been using a First Premier Bank card i got when my credit score was low and could not get a decent card before. Now that i have built my credit up a bit i got my discover card which I would like to keep as my current card of use since there is a 0 dollar annual fee. But my First Premier Bank card does have a hefty annual fee that i have already payed off at least until August this year before i got my new card. So my question is do i keep both accounts open and only use my Discover card? keeping my other card at a balance of $0 each month at least until before August when my next fee would roll around and then cancel it before i have to make the annul fee on it. Would this help my credit having 2 cards open and only using one of them? Do i have to use both cards to have the benefits for my credit? Or would my best option be use both cards when needed keeping both current balances far from reaching my total available credit for the month and then paying both cards current balance off in total before the next billing period so i would not have to pay any interest on the outstanding balance?…. I am new to this and would really like some quality advice thank you.

  • Creditlady

    I know that making payments on time is incredibly important. I started with a secured credit card and now have added an unsecured card as well. I want to continue to boost my credit score as well as get rewards, particularly travel rewards–as such, my question is once you meet a minimum spending amount for the card’s rewards or if say you even just open a new card to boost your credit, does it matter how much you spend on it after that point? as I would most likely just keep the card open to build credit.

  • Creditlady

    I know that making payments on time is incredibly important. I started with a secured credit card and now have added an unsecured card as well. I want to continue to boost my credit score as well as get rewards, particularly travel rewards–as such, my question is once you meet a minimum spending amount for the card’s rewards or if say you even just open a new card to boost your credit, does it matter how much you spend on it after that point? as I would most likely just keep the card open to build credit.

  • David

    What is the least you can use a credit card and still have it improve your score? My car insurance was going up due to the fact I had limited credit (as in I don’t really take loans or use credit cards). I just got the Capital One Quicksilver to help raise my score, but I really don’t care to use it much. Is using it twice a year enough?

    • Carlius

      Honestly it’s all about managing your payments. I raised my score 54 points in 6 weeks, with just the secured card. I swipe everything that I normally would pay cash for, groceries, gas, etc etc. Then I pay them right back as soon as it hits my card.

  • David

    What is the least you can use a credit card and still have it improve your score? My car insurance was going up due to the fact I had limited credit (as in I don’t really take loans or use credit cards). I just got the Capital One Quicksilver to help raise my score, but I really don’t care to use it much. Is using it twice a year enough?

  • Sheila3e23

    Does it boost my score if I use my card for nearly all purchases, and then pay on the card a few times each month?

  • Sheila3e23

    Does it boost my score if I use my card for nearly all purchases, and then pay on the card a few times each month?

  • mike

    Depending on the company they may not accept giving u a regular credit card but I went and got a secured card and paid the deposit to get it I would bring it up to about 40 percent each month and pay it off in full each month my score jumped 30 points now I tried with same company as the first card and got approved for a regular credit card and doing that as well.

  • mike

    Depending on the company they may not accept giving u a regular credit card but I went and got a secured card and paid the deposit to get it I would bring it up to about 40 percent each month and pay it off in full each month my score jumped 30 points now I tried with same company as the first card and got approved for a regular credit card and doing that as well.