How I Increased My Credit Score 100 Points
As much as I never wanted to believe it when I was a teen, I didn’t think that your credit score mattered if you had the cash. I planned on being rich by the time I was 25 so that statement did not affect me. Boy was I wrong! I’d always heard the term, “money talks” and true enough it does but so does a good credit score.
Over the course of the last year, I’ve decided to work more on my credit than I ever have. It has always been good, but I wanted better. My goal was to hit 850! An 850-credit score is the best score there is. So many perks come with having a good credit score. Things such as little to no interest, more borrowing power, and all-around more opportunities. Lenders trust you more when they know that you are of low risk.
Here is what I did to get closer to one of my many goals in life.
Payoff As much Debt as possible
After sitting down with my husband, I realized that we were knee-deep in debt. It was a hard and very stressful conversation to have but it needed to be done. We came up with a plan to pay off as much debt as we could. He felt that with us being well over $40,000 in debt that it was a bit too impossible to pay off so soon. For me, I knew it was possible! He is more of a free spender than I am, so we agreed to let me hold on to what we made. If our bills were paid, and we had food in the house, I could go a while without spending. I would practice free self-care tricks to keep my mind in order. I don’t recommend anyone to try the first method, but it worked for us. 😊
Research is where it all started. I had to find a way to get him on board even more. I tested the waters by telling little white lies to get extra money out of him each month. No, I am NOT a gold digger, I am a GOAL digger! I have goals for us and I know just what it will take for us to reach them. Every month I would tell him that I need extra money for a bill. Our light bill has never been more than $85 per month but he doesn’t know that. If I told him that our bill had increased, he would hand over what was needed. When it comes to our bills, he doesn’t ask questions, he just gives.
Once we had a couple of credit cards and loans paid in full, I told him the truth. Only then did he start to see the light at the end of the tunnel. It motivated the both of us so much that we would literally place chunks of our paychecks towards our remaining debt.
Balance Transfer
The next thing that we decided to do was balance transfer what we could to save money on interest. I wanted to ensure that our money went solely to the principal to knock down our balance even faster. I balance transferred all but about $50 because I did not want to close the credit card account that I’d had for the past 8 years. Length of credit history matters! It was my oldest credit card and I knew that by closing the card, my credit score would take a huge hit. I should also let you know that a balance transfer requires you to have a decent credit score before getting approved.
I signed up for a credit card that offered 15 months 0% APR and a $0 balance transfer fee. From there I planned to pay off our remaining debt without the stress of added interest fees. As a bonus, the card came with rewards points! Your points do not accumulate when you have a balance transfer but rather when you are making a purchase on the card. I plan on having the card paid in full well before the promotional period ends so that I can take advantage of the rewards with 0% interest.
Keep in mind that not everyone’s credit score increases at the same rate. Also, be patient, your score will not increase overnight. As an added bonus I should also let you know that anything over a 740 gets you the same perks as an 850! It will go down before it goes up after you pay a bill in full so don’t get discouraged.
Don’t Close Credit Card Accounts
As I have already mentioned above, leave all old accounts open. Your credit score is determined by the following calculation:
35% payment history
30% amount owed
15% length of history
10% new credit
10% types of credit used
Closing old accounts with good payment history is the fastest way to decrease your credit score. It is ideal to use less than 30% of your credit card limit if you want your score to increase. The following step will help to get you there faster.
Automate a Small bill
For me, that small bill was Netflix. Once I paid off a credit card, I set up automation for my Netflix to automatically be deducted each month. After 6 months I saw a major increase in my score. You can also set your account up for your credit card payment to be deducted from your bank account before interest starts to accrue.
Be sure to pay your credit cards off in full each month. There are so many myths out there that will tell you to let interest accrue and pay the minimum only. DON’T DO THIS! This is how I started out and before I knew it, I was head over heels. Yes, the minimum payment sounds so enticing but paying the minimum payment over the course of the next 7-8 years only results in a major overpayment for you!
Credit Card Company $$$$, You-0.
Clean Up Your Credit Score
Multiple name spellings, wrong addresses, and phone numbers often decrease your credit score. If you have a common name, your account could easily be merged with someone else in the world that has the same spelling.
From personal experience, not only did it have all the above on my credit report, it had my job information as well.
You are entitled to one FREE credit report per year. If you don’t know what is on your credit report then you can go to www.annualcreditreport.com. Order all three of your credit reports and dispute the errors. Whether it is a 1-point increase or a 30-point increase, every increase is a good increase when it comes to your credit!
As for me, I am well on my way to an 850. What are some of the problems you’ve had when it comes to your credit score? Leave us a comment below. You never know who you could help.
