Buzz
In today's world, where credit is essential, even if its impact only affects your financial situation, it still matters immensely. If your FICO score falls below 670, you're likely to face difficulties. If it drops below 580, you're in for some serious challenges. There are the usual methods for raising your score: check your credit reports and correct any mistakes, reduce your debt, and clear old or overdue accounts. But there are also some lesser-known strategies that can improve your score too.
Rent reporting
One of the lesser-known methods to improve your credit score is by having your rent payments reported to credit bureaus.
Your credit score serves as a general assessment of your financial dependability, so it's understandable that paying any type of bill can impact it—provided the credit bureaus are informed. If you can convince your landlord to sign up for a rent-reporting service like Piñata (which is free), your rent payments will be shared with the three major credit reporting bureaus (Experian, TransUnion, and Equifax). All three will consider those payments, as making timely and full rent payments reflects well on your financial management. Piñata even claims that using their service could raise your score by up to 60 points, just by paying a bill you’re already responsible for.
Credit-boost services
Just like rent payment reporting, you can also use credit-boosting services such as Experian Boost to raise your score by linking your bank account and tracking payments for utilities, phone bills, and even streaming services. These free services help improve your credit score as you consistently demonstrate a history of on-time payments across various bills.
Limit requests
Each time you apply for a loan, credit card, or any type of new debt, your credit reports are affected by what's called a 'hard inquiry.' Every hard inquiry will temporarily lower your credit score, regardless of the situation. This creates a potential trap: applying for more credit can lower your score, which then makes it harder to get approved for additional credit.
One way to improve your credit score is to simply stop applying for new credit, which contradicts the usual advice that responsibly using credit boosts your score. The longer you can avoid taking on new loans or credit cards, the better your score will become.
Consolidation loan
If you're juggling multiple debts with various credit cards, banks, or companies, you might want to look into a debt-consolidation loan. This loan covers all your existing debts, consolidating them into a single larger loan. There are several benefits to this approach: you’ll have one monthly payment, fewer accounts to manage, and likely a lower interest rate overall. Plus, as your total debt decreases, your debt-to-credit ratio improves, which should lead to a higher credit score.
Request limit increase
A surprising method to boost your credit score is by requesting an increase in your credit card limits. This is usually as simple as calling your card issuer and asking for the increase. The reason it helps is that it lowers your debt-to-credit ratio. By raising your available credit, you end up utilizing a smaller percentage of it, which can improve your score. It's important to note that you shouldn’t use the newly increased limit; the goal is just to improve the ratio.
Credit-builder loan
If you're looking to boost your credit score, you can actually lend money to yourself through a Credit-Builder Loan. This involves setting up an account, typically a certificate of deposit (CD) or a savings account, and making regular principal and interest payments into it over a set period. These payments are reported to credit bureaus, which can help improve your score. At the end of the loan term, you'll get the funds you deposited back (though the interest you paid may vary). This is a relatively low-risk option for both you and the lender, so even if your credit score is low, you should be able to set this up.
Improving your credit score doesn’t have to be complicated. Sometimes, all it takes is making sure you pay your bills on time, as long as someone is tracking those payments.
