When it comes to boosting credit scores, the only limit is creativity of the personal financial advisers. There are just so many ways to “skin this cat” but if you want to do it the right way, you need to do it the old-school way. There are no shortcuts or tricks. You just need to do it ethically and in a slow and steady manner.
If you do it this way, you are building your personal financial house on solid rock instead of shifting sand. There are many quicker methods out there that may work in the short term, but if you really want to establish the right personal financial habits, you need to do it the right way. Here are three ways you can boost your credit scores.
Don’t pay off all your cards immediately
One of the biggest myths regarding the improvement of your credit score is to pay off all your credit cards immediately. This is not quite right. Credit bureaus are basically looking for consistency of payments. They are looking for disciplined persons who pay off their debts and obligations in a methodical and constant manner.
If you take out a debt and pay it off immediately, these factors can not be examined. You end up being stagnant in a certain place. So you have to make sure that your payments are measured so that you establish a good credit history. The keyword here is history. That is the bottom line when it comes to credit scores. You won’t have much of a history if you pay off your cards immediately.
This is the “meat-and-potatoes” of credit bureaus. They look at your ability to pay regularly. We are not talking about just paying the minimum here. In a broader sense, we are discussing whether you are a consistent payer or not. These bureaus are looking for a pattern or a history. So you have to give them the kind of history that they want for them to improve your credit scores. Learn what the system is looking for and work within the system to get your scores to go up.
Keep getting credit limit boosts
When you get a credit limit boost from your credit card provider, this sends a positive signal to the credit bureaus of your improving credit worthiness. There are two ways to do this. You could do this passively by waiting for your credit card provider to approach you directly regarding your payment history. They will see that you use your credit and make your payments on time. They will reward you by increasing your credit limit. Of course, it also rewards themselves by allowing you to get into more trouble with debt.
The other way of raising your credit limit is by being proactive and approaching the credit card provider yourself and ask for a limit boost. If you have a steady history of payments they will reward you by raising your limit. When your limit goes up, your credit utilization rate decreases and thus your score goes up.