How to improve your credit overnight (well, almost)
By definition, credit is a reflection of your ability to use credit and manage your money wisely over time. Establishing a history of responsibility takes time. There is really nothing that you can do to improve your credit overnight, but there are plenty of things that you can do today that will start to improve your credit in the near future. Below you will find a list of things that you can do today to improve your credit in as little as 90 days.
Apply for credit cards (Visa, American Express or MasterCard only)
The credit rating formula looks at the difference between the amount of credit a person has and the amount being used. Having as much credit available to you as possible and using it responsibly is great for your credit. Some people believe that having too many credit cards can have an adverse effect on a credit score. This is not true if you are wise with your credit spending. Closing these lines of credit will not improve your score. In fact, closing one or more accounts will reduce your total available credit. This in turn lowers the percentage of available credit, and the credit score will drop. Because the credit formula also factors in the length of time credit accounts have been open, closing an account with several years of history is a terrible mistake. In doing so you are throwing away a valuable opportunity to gain more credit.
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Open a line of credit on your debit card
Opening a line of credit on your debit card creates another available line of credit even if you never use it. Your ratio of current to available debt will increase with little or absolutely no effort from you.
Ask for in-store loan approval on furniture, appliance, electronics, etc. purchases
Again the more accounts that you can open and responsibly pay off the better your credit score will be. Even if you have the money to pay for your purchase immediately, opening an account for it and making a few payments will do more to increase your credit score than simply paying with cash.
Pay off opened accounts
You want to be doing all that you can to eliminate the amount of debt on your record. The more debt you can eliminate the more responsible you will look to lenders and the more available debt you will have on your credit history. Installment payments (payments of a set amount due by a certain day of the month) account for about 10% of your total credit score. It is good to be paying them regularly but even better if you can pay it off entirely before asking for more money.
Do not buy anything substantial on debt
When you are trying to improve your credit the last thing that you want to do is put a car or other type of substantial loan on your record. You should be working to pay off your debts, not acquiring new ones.
Stay put
Credit worthiness has a lot to do with stability over time. You need to develop a history with your bank, your employer and in your residence. In order to get the best possible interest rate on a loan you need to have been in the same residence and with the same employer for at least 2 years.
Sacrifice now for benefits later
A vital thing to remember as you start opening accounts in order to raise your ratio of current to available debt is that every time you have your credit history pulled your score goes down 5-7 points. Plan carefully because pulls that are like in nature and within about a week of each other only count as one inquiry. Your score will take a blow for 90 days after you have your report pulled but after that those 5-7 points will be put back on your score. Make sure that at least 3 months prior to a big purchase you have made sure not to have anyone pull your credit.
