How to RAISE Your Credit Score Quickly (Guaranteed!)

Summary

This video provides a step-by-step guide on how to increase your credit score to 800, covering easy and actionable strategies. It explains key factors like payment history, credit utilization, and the importance of building diverse credit. Viewers learn how to improve their credit score quickly, whether by becoming an authorized user on someone else's credit card or by building a solid credit history. The video also emphasizes the significance of managing credit responsibly, paying off balances, and checking credit reports for errors, with practical tips to boost your score over time.

Takeaways

• 😀 Understand the components of your FICO score: Payment history (35%), credit utilization (30%), length of credit history (15%), new credit (10%), and credit mix (10%).
• 😀 The quickest way to boost your score is by becoming an authorized user on someone else's credit card, ideally someone with a strong credit history.
• 😀 If you lack credit history, start with a secured credit card, where you make a deposit to create a credit line.
• 😀 Paying off your credit cards in full every month is crucial for raising your score, and autopay can help avoid missed or late payments.
• 😀 Diversify your credit types (e.g., credit cards, auto loans, mortgages) to strengthen your credit profile and increase your chances of being trusted by lenders.
• 😀 Avoid applying for multiple lines of credit at once, as this can lower your credit score due to hard inquiries and make you appear financially unstable.
• 😀 Keep your credit utilization ratio under 30%, ideally below 10%, to show that you're using your credit responsibly and not overextending.
• 😀 Check your credit reports regularly for errors, and dispute any inaccuracies. Errors are more common than you might think and can significantly impact your score.
• 😀 Request a credit limit increase from your credit card companies, especially after building a positive history with them, to lower your utilization ratio.
• 😀 Building a solid credit history and staying on top of payments will help you achieve a higher score, ultimately opening up better borrowing opportunities with lower interest rates.

Q & A

What is a FICO score and what are its main components?

A FICO score is a credit score that measures a person's creditworthiness. It is determined by five key components: 35% payment history, 30% amount of debt (credit utilization), 15% length of credit history, 10% new credit, and 10% credit mix.

How can becoming an authorized user on someone else's credit card boost your credit score?

Being added as an authorized user on a credit card can increase your score by associating you with the primary cardholder's positive credit history. This can significantly boost your score if the primary cardholder has a good credit rating, but it may not work if their credit history is poor or if the cardholder’s actions negatively impact your credit.

What should you do if you don’t have any credit history?

If you have no credit history, start by applying for a secured credit card. A secured card requires a deposit that serves as your credit limit, which allows you to build a credit history while limiting risk for the lender.

Why is paying off your credit cards in full important for improving your credit score?

Paying off your credit cards in full helps avoid late payments, which directly impact 35% of your FICO score. Regularly using autopay can help you stay on track and prevent missed payments, which can otherwise cause significant damage to your credit score.

How does getting multiple lines of credit affect your credit score?

Opening multiple lines of credit, such as credit cards or loans, can increase your total credit limit and diversify your credit mix, which strengthens your credit history. This can help you maintain a low credit utilization ratio and show lenders that you can manage different types of credit responsibly.

What’s the best way to approach applying for new credit to avoid negatively impacting your credit score?

To minimize the impact on your credit score, avoid applying for too many new credit lines at once. Multiple hard inquiries within a short period can lower your score, and lenders may view you as a higher risk borrower. It's better to wait until after significant purchases like a car or house before applying for new credit.

What is the credit utilization ratio, and why should it be kept under 30%?

Credit utilization is the ratio of your current credit card balances to your total credit limit. Keeping it under 30% shows lenders that you’re not overly reliant on credit, and it can improve your credit score. Lower utilization, ideally under 10%, is even better.

How can you keep your credit utilization ratio under 30%?

You can manage your credit utilization ratio by either getting more credit cards to increase your total credit limit, spreading charges across multiple cards, or paying off your credit cards more than once per month to ensure your balance stays low.

Why should you check your credit reports for errors, and how can this affect your credit score?

Regularly checking your credit report helps you identify errors, such as accounts reported multiple times or incorrect information, which can negatively affect your credit score. If you find any errors, you can dispute them, and correcting them could boost your score.

How can asking for a credit limit increase help your credit score?

Asking for a credit limit increase can improve your credit utilization ratio by giving you more available credit. With a higher limit, you’re less likely to exceed 30% utilization, which can improve your score. It's often easy to request an increase after building a solid history with the card issuer.