Whether you’re just starting to build your credit or you’re trying to improve your score, these credit hacks will help you grow your credit score.
The current average FICO® 9 score in the US is 703. That’s well within CreditKarma’s “fair to good” range of low-600s to mid-700s. But whether you’re below this margin, or you just want to build your good score even further, here are some useful credit hacks to help you out.
Automate payment on your billsTiffany Aliche, a personal finance expert, says that king of credit hacks is “paying what you owe and paying when you owe.”
Since your payment history accounts for 35% of your credit score calculations, it’s best to make sure that you never miss a payment. What’s the best way to do this? By automating payments.
And while it’s important to pay all of your bills on time, the ones that most impact your credit score should be a priority. With FICO, these are your credit cards, store retail cards, car loans, and mortgages.
Report your rent and utilities payments
For more than 25% of Americans, rent is their largest monthly expense. Over 60% of under 35-year olds are renters. However, less than 1% of Americans see their positive rental payment history in their credit files.
One of the credit hacks to let you get more out of your rent expense is to use a data furnisher like LevelCredit to report your on-time rent payments to the major credit bureaus. LevelCredit users boost their score by an average of 29 points after just two months of rent reporting. Sub-prime users typically enjoy score increases of over 50 points.
Become an authorized credit user
One of most useful credit hacks, especially when you’re just starting to build your credit score, is to become an authorized user and piggyback on the good credit habits of others.
If your parents (or any family member for that matter) has good credit, you can ask them to add you as an authorized user to their credit card. This can improve your score by up to 10% in just a month,according to Credit Sesame.
Consolidate your bad debts into one payment
The idea with this credit hack is to take a bunch of small debts – credit card bills, personal loans, car loans, and so on – and consolidate them into one bill.
Joseph Hogue, a chartered financial analyst, has talked about how much this helped him rebuild his credit:
“I lowered my interest rate from an average of 18% on five different debts down to 13% when I did this loan consolidation, and I saved more than $500 a year in interest payments.”
The real credit lift comes from turning your “revolving debt” (like your credit card, which has no fixed payment or payoff date), into a non-revolving one, because personal loans do have fixed monthly payments and payoff dates.
If you can do this in a smart way, it’s a great credit hack.
Negotiate your bad remarks off your credit report
Lenders have a lot of power, and ultimately, they just want to get paid. This credit hack involves picking up the phone and calling up anyone who left a bad remark on your credit report, especially the ones you still owe money to. Then, negotiate, and say you’ll pay them off within a timespan (a couple of months, say) if they promise to remove that bad remark on your credit report. And they can’t deny the ability to do that because things can and do get removed from your credit report all the time.