Amazing FREE Method for an 800 Credit Score!
You don’t need me to tell you how vital a credit score is. The better your score, the more financial opportunities you have. The lower your score – well, you might as well be on some sort of secret black list, because you won’t be able to live much of a quote-unquote “normal” life.
But what if there was a way you could improve your score, not just to a respectable level, but to get it to the super-elusive 800 score? And not only that, what if the method was FREE? I know … that sounds pretty crazy, but I’m Kim and in this Article that is exactly what we’re going to cover. Ready? Let’s go!
How your Credit Score Works?
So, before you can figure out how to get a perfect score, you need to understand how the score works. Just like your grades in class depend on things like homework, tests, attendance, etc, your credit score also is a reflection on different things you do.
The first part of your credit score is how often you’ve paid your bills on time. This is worth 35% of your credit score. This one is very easy to understand. Just don’t forget to pay your credit card bill and never pay it late. To get a perfect credit score, you’ll need to pay your bills on time almost every time.
It is probably one of the most important parts to this equation. Here’s how this works and how to figure it out. The credit card company looks at all of your on-time payments and divides that number by the total number of payments you’ve made.
Then, based on that, they figure out what percentage of your bills you paid on time. Here’s an example: Let’s say you’ve had one credit card for 60 months and you missed one payment. If you divide the number of payments made on time by the total number of payments, you get 98.3%.
Which might seem good, but those 1.7% can have a pretty big impact. But in a different situation, let’s say you’ve had two credit cards for 60 months each and you missed one payment. Well, you now have two credit cards with a total of 120 payments, which means that each one needs 119 on-time payments.
If you divide that number by the 120 total payments you’ve made on both cards, you’ll find that you’ve made 99.1% of your payments on time. This actually lifts you up into a respectable category, which is much better.
And to give you one more example, let’s say you’ve had one credit card for just 15 months, but you forget to pay one bill. The same math still works. You have paid 14 bills on time. If you divide that by the 15 payments you’ve made, you’ll see that you’ve only been 93.3 percent on time. that’s not good.
In fact, it’s kind of terrible. You could stop this from happening if you didn’t miss a payment in the first place and if you had more credit for a longer time. With more credit lines you also have better odds for a missed payment to not hurt you as much.
For example, if you had ten credit cards for five years, that is a total of 600 payments. If you missed one payment by accident, you would still have paid 99.8 percent of your bills on time, which isn’t the end of the world.
When it comes to paying off a credit card on time, the good news is that all you have to do is make the minimum payment every month, which is usually between $25 and $50. Even if you can’t pay off your credit card bill in full, making the minimum payment on time every month will help keep your score in this category, which is the most important part of your score.
What is the next most important part? Credit utilization! This counts for 30% of your grade. Now, to get a perfect score, the credit bureaus just want to see that you’re not maxing out all of your credit cards and that you’re only using a small portion of the total credit you have available.
You should try to spend less than 10% of your total credit limit. This shows the credit card company that you’re good with money and don’t need all the money they’ve given you. Here’s how it’s calculated. Let’s say you have a credit card with a limit of $10,000 and you go out and spend $6,000 on it.
That equals 60% of your available credit, which is bad. And because you have a higher balance, you’re seen as a riskier borrower. This will lower your score. On the other hand, if you have the same credit card with a $10,000 limit, you spend $6,000 but pay it off in full when it’s due.
That means you now owe $0 on a $10,000 credit line. This means you are using 0% of your available credit, which makes the credit bureaus very happy. The truth is, credit card companies don’t care about the amount of money you spend, but rather how much credit you use.
So, if you have a $300 credit line and spend $300, it means you’ve reached the limit on your card. You’ve used up all of your credit, which is a very bad thing. But if you spend the same $300, but this time you have a $30,000 credit line, it shows that you are only using 1% of your credit, which is great.
One way to help with this is to have a lot of available credit with really high limits on each one. If you had more than a dozen credit cards right now, and many of them have credit lines of more than $30,000, odds are you won’t be spending that much money very quickly.
It’s helpful if some big expense comes up, but even if something does your credit utilization rate will not be too heaviliy affected with so much available credit. Some people say to keep a small balance on your credit card at the end of every month so that the credit bureaus have something to report.
This is actually not true. Keeping a balance on a credit card won’t help your score, and if anything, it will cost you more money in interest. So it’s always best to pay it off in full by the time it’s due. And never, ever have a credit card balance.
If you want a perfect credit score, try to keep your balance at 5% or less of your available credit. That doesn’t mean you can’t spend more than 5% of your available credit, but it does mean you should pay it down before the end of the statement cycle.
So, the credit bureaus will have less money to report on. Also, even though it seems counterintuitive, it will help you if you go out and get more credit cards. This is because it will increase the total credit limit you have, which will lower your overall credit utilization.
On top of that, every six to twelve months, you should ask your credit card company to raise your credit limit. This way, you’ll always be lowering the amount of credit you’re using, which will help your score. Of course, this doesn’t mean you should spend more money becuase you have more credit.
These are tactics to help your credit score, not a way to get the new iPhone14 Pro Max. The amount of money you keep as a balance on a credit card will only be there for a short time. This is one of those things that will hurt your score only until you pay off your credit card, after which your score will go up.
So if you have a high utilization rate right now or in the near future, it’s not the end of the world, and your credit score will go back to normal once you pay it down. It’s worth noting that the average length of your credit history makes up 15% of your overall credit score.
This just means that the sooner you start and the longer you’ve had credit, the better. This is one reason why I always tell people to start building credit as soon as they can, even if that means getting a credit card the day they turn 18.
This will help you start building your credit history right away. Of course, this is a bit of a double edged sword, since the time we’re most likely to abuse credit is when we’re younger. But hopefully that isn’t you. I mean, you’re reading techleaningsolution.com, so you are probably pretty responsible, right?
So, you don’t have to pay anyone to try and raise your score. You can do all of these things yourself, for FREE. Just remember to keep working at it and maintain that excellent score. Then, when you apply for any loan, you can get the best deal. Of course, getting the best loan means understanding interest rates.
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