How To Raise Your Credit Score: Tips and Strategies

Camino Financial28 Nov 2023
How To Raise Your Credit Score: Tips and Strategies
Knowing how to raise your credit is crucial if you want to get loans or credit cards, and it's important for your present and your financial future. In this article, you'll learn credit-building tips and strategies fast. Increase your credit score with a loan

19 Tips and Strategies on How to Improve Credit Score

Here are some tips on how to raise your credit score in 30 days. If you have any of the questions above, the following tips and techniques will help you improve it as fast as possible and in as many points as possible.

Report Your Rent

Do you think the only way to build credit history is by accessing credit? Wrong! If you rent property, there’s an excellent chance that your property manager doesn’t report your rent to the credit bureaus. In our experience, when Camino Financial members begin to report rent, their credit scores swing up above 50 points in a few weeks! The trick is to be proactive when reporting your rent directly to the credit bureaus. The cheapest way to do so is to reach out to your property manager and credit bureaus and the fastest way is to work with rent reporting agencies that already work with the credit bureaus. Experian shares how you can report your rent.

Get a Secured Credit Card

If you don’t have a credit history, you may qualify for an unsecured credit card that does not require an initial deposit. A secured credit card is not the same thing as a prepaid debit card, and it’s definitely not the same as an unsecured credit card. You open a secure credit card with a bank or credit card provider that requires a refundable security deposit, usually starting at $200. Annualized Percentage Rates (APRs) vary with these types of credit cards ranging from 9.99% to 18.95%. This is an effective way to build credit, especially when you don’t have a credit history or bad credit.
#CaminoTip Understanding the difference between APR vs interest rate is important before you start shopping for a loan. Both factors significantly affect the total amount you will pay for a loan.

Purchase Electronics with Installment Payments

Purchase an electronic device (or another hard good) on an installment basis. Camino Financial doesn’t recommend this for people who already have a credit history, but it can be a great way to build credit when you don’t have a credit history. How is this different from getting a credit card? Rather than opening a credit card at the point of purchase, you can pay off purchased electronics in installment payments. Buying a credit card can hurt your credit if it means you need to exceed 30% of the credit limit (see Tip #8). However, paying an installment loan builds your credit. So make sure that whatever you purchase has installment payments, and verify that the retailer reports these payments to the credit bureau. See Tip #6 below on how to get a copy of your credit report.

Pay Your Bills on Time

This important tip on how to raise your credit score prevents your personal credit score from taking a nosedive. Bottom line: make sure you make timely payments to creditors. Lenders know you’re creditworthy and reliable when you pay your debts on time. They don’t want to see notations on your credit report that you fail to pay utilities, your cell phone bill, rent, and other financial obligations. Consider setting up automatic payments or getting smartphone alerts so you always pay your bills on time. See these other recommendations on how to pay off debt quickly.

Consolidate Credit Card Debt into an Installment Loan

If you already have credit cards and exceed your 30% credit card limit capacity, you need to evaluate options to consolidate credit card debt into a single installment loan. Finding lenders comfortable with refinancing your credit card debt is easier said than done; a personal loan could be the answer. Or, if you have business debt, a small business loan might be what you need! Increase your credit score with a loan
#CaminoTip Can You Refinance a Personal Loan? How to Do It

Request Your Credit Report Regularly

You can request a free credit report from one of the three main credit bureaus, use Credit Karma, or have a representative from your bank request the report. By getting a credit summary, you’re able to spot inaccurate information and take steps to correct those discrepancies. Plus, after implementing these tips on how to improve your credit score, you can see how those changes made a positive impact.
#DidYouKnow It’s very important to keep a healthy personal score, but don’t forget your business score too. Here’s how to build credit for your small business.

Keep Credit Trade Lines Open As Long As Possible

The credit bureaus reward consumers for having credit lines available over a long period. This demonstrates to them that you have a track record of maintaining a long-lasting relationship with a creditor rather than accumulating delinquencies where you’re forced to close accounts with creditors. Credit bureaus use tradelines to calculate a borrower’s credit score by reviewing credit limits, the extended length of time, and the payment history. Your payment status indicates whether you make timely payments.

Never Exceed 30% of Credit Capacity

As a rule of thumb, you should never exceed 30% of the credit card limit. The moment you start exceeding this credit limit, having a credit card will actually hurt your credit rather than help build it. When you exceed 30%, it’s a red flag to the credit bureaus that you don’t have a healthy credit utilization ratio (debt owed relative to credit limits). Camino Financial recommends staying within 5% to 30% of your credit card limit. This helps you build credit and get your score up. In some instances, your credit score gets a boost very quickly when it’s the first time you’ve established a credit history.

Get a Higher Credit Limit

Maybe you can’t use less than 30% of your credit. Does that mean you won’t be able to improve your credit score? No! A good way to fix this is getting a higher credit limit, but for this one to work, you can’t actually spend the newly available credit, as tempting as it may seem.

Pay Off Credit Card Balances Each Month

Now that you have a credit card, you may think: it’s time to buy stuff on credit. Not necessarily. You should use your credit card to make purchases but always pay off the balance at the end of the month to build credit. Not only do you avoid paying interest, but you establish a positive payment history demonstrating that you know how to manage debt. Here you can learn how to make the best use of your credit card to increase your credit score.

Learn When your Credit Card Reports Payment History

Sometimes, when your financial institution reports your credit card’s payment history is not the same as your due date. Why does this matter? Because it gives a better impression if you have no due balance (because you just paid) vs. having a big balance (because it’s still not your due date). By knowing when your payment history is reported, you can make sure your balance is low to give a better impression.

Make More Than One Payment Each Month

In certain situations, this can help you increase your credit scores because you keep a low credit card balance at all times. Maybe your bank or financial institution doesn’t have an exact date when your payment history is reported. Then you need to find a way to keep your balance low for a longer time. You could make more than one payment each month.

Limit the Number of Credit Applications You Complete

Every time you fill out an application for credit, creditors make requests call hard inquiries or hard pulls. These credit checks affect your credit score and remain on your report for two years. On average, each hard inquiry can reduce your credit score by 5-10 points. Therefore, too many inquiries cause your credit score to plummet, so you could pay higher interest rates for loans and credit cards. In a worst-case scenario, a lender could reject your request for credit.
#DidYouKnow When you apply for a loan with Camino Financial, we do a soft pull of your credit that doesn’t affect your credit score at all.

Open a Checking Account

If you’ve never established credit, open a checking or savings account with a local bank. Doing so won’t build credit, but it does put you in a better position with the financial institution to get a loan or apply for a credit card. They can see that you know how to handle money when you make deposits and withdrawals without overdrawing your accounts. Once you get a loan and start repaying debt, you begin establishing a credit history immediately. Read this article to know the best business checking accounts available in the market.

Make Sure Unpaid Debts Aren’t Sent to a Collection Agency

Another way for your credit improvement is to work closely with lenders when you have a financial crisis and can’t make payments. When you’re upfront about your situation, most likely, they will work with you to set up a different payment plan. It’s in their interest because most collection agencies settle unpaid accounts by decreasing the debt.

Increase Your Income

A higher-income causes your debt-to-income ratio to decrease. This helps make a favorable impression on lenders when a borrower is about to receive a salary increase or a large bonus. Getting a raise may even put you in a position to apply for a larger loan amount.

Don’t Close Paid-Off Credit Cards

Don’t close a credit card account simply because you don’t use the card. Even if you aren’t using credit on unused cards, the available credit counts toward lowering your credit utilization ratio mentioned in Tip #8. So, as a strategy on how to improve your credit score, keep those accounts open!

Set Up An Emergency Fund

Having a nest egg to fall back on is a good idea. Instead of maxing out your credit cards when unforeseen expenses crop up, you can dip into savings. Start building up this account as soon as possible. Even if you can only contribute $25-$50 a month, that’s a place to start.

Don’t Rely on Just One Type of Credit

Your credit score is a mix of many different things: it’s not just your credit card utilization but business loans, mortgages, car loans, etc. You have a lot of ways to improve your credit score, so if you can afford a new type of credit, having a diverse credit mix (and paying everything on time) can help your credit score be healthier.

How to Increase Your Credit Score: Why does this matter?

Improving your credit score can save you hundreds or thousands of dollars for the typical auto loan or credit card. A business owner's positive credit history can save you tens of thousands of dollars in interest rates on long-term loans. In general terms, a good credit score can save you money on interest rates for loans and credit cards, help you get approved for new lines of credit, and make it easier to lease a car or rent an apartment. If you have a bad credit report, that can do the opposite – making it difficult or impossible to get approved for new lines of credit and costing you more money in interest rates.

How Long Does Improving Your Credit Score Take?

It can take months or even years to improve your score. The length of time depends on a number of factors, including your current score, payment history, and credit utilization. If you have low credit, it's important to start working on improving it as soon as possible. The sooner you start, the sooner you'll see results. So if you are wondering "how to boost my credit score," keep reading to learn how to do it.

How Fast Can You Raise Your Credit Score?

You can definitely start improving your credit score as fast as 30 or 60 days (depending on what steps you’re taking to improve it), but how quickly you build it also depends on your initial score. If you have a bad score, it might take you considerably longer to get your credit score to an ideal place. But if you follow the above tips to increase your credit score, you’ll definitely be on your way to a better one.
Learn more about how long it actually takes to build credit

How to keep your credit score high?

There are a few things you can do to keep your credit score high:
  1. Make sure you always pay your bills on time. This is the most important thing you can do to maintain a good credit score.
  2. Keep your credit utilization low. This means using less than 30% of your available credit at any given time.
  3. Don't open too many new accounts at once. This can negatively affect your credit score.
  4. Review your credit report regularly and dispute any errors you find.
  5. Get a copy of your credit score and review it regularly to make sure there are no errors or surprises.

So, why is your credit score going down?

There could be a number of reasons why your credit score is going down, including but not limited to:
  • You're not keeping up with your payments on time.
  • You have too much debt compared to your income.
  • You've recently applied for a lot of new credit cards or loans.
  • There's been an error on your credit report.
If you're not sure why your credit score is going down, it's best to get in touch with the company that issued your credit score and asks them what might be causing the drop. From there, you can work on fixing whatever might be wrong and hopefully see your score start to go back up again.

Credit Score Table: Risk and Interest Rates

Before we get started, here is the perceived risk by lenders for different credit score bands to underwrite an unsecured business loan:
Credit Score Band Risk Annualized Interest Rates
721 and above Low Risk 6% to 12%
681 to 720 Low to Medium Risk 12% to 19%
641 to 680 Medium Risk 19% to 25%
600 to 640 Medium to High Risk 24% to 60%
599 and below High Risk 40%+
No Credit Score Medium to High Risk 25% to 60%
As you can see, a good score will help you get better interest rates because lenders will see you as less risky.
#DidYouKnow A personal score can be just as important as a business credit score when applying for a business loan.

5 factors that affect your credit score

Your credit score is a number that represents your creditworthiness. Lenders use it to determine whether you are a good candidate for a loan and what interest rate they will offer you. The five factors that affect your score are:

Payment history

This accounts for 35% of your score and includes information on whether you have made your on-time payments.

Credit utilization

This accounts for 30% of your score and measures how much of your available credit you are using.

Length of credit history

This accounts for 15% of your score and looks at the length of time you have been borrowing money.

Credit mix

This accounts for 10% of your score and looks at the different types of debt you have, such as revolving debt (credit cards) and installment debt (car loans).

New credit

This accounts for 10% of your score and includes information on any new credit accounts you have opened or inquiries made about your credit. These are the five factors that affect your credit score. Lenders use this information to determine whether you are a good candidate for a loan and what interest rate they will offer you.
  • If you have a high score, you are more likely to have a financial institution approve you for a loan with a lower interest rate.
  • If you have a low score, you may still be able to get a loan, but it will likely have a higher interest.

What to avoid when working on your credit score

There are a few things you should avoid if you want to maintain a good credit score. Some of these include:
  • Missing payments or making late payments on your bills
  • Running up high balances on your credit cards
  • Applying for too many new lines of credit in a short period of time
  • Closing unused credit card accounts
  • Filing for bankruptcy

Camino Financial Small Business Loans Help You In Your Credit Journey

This article about the best ways to improve credit quickly not only opens doors to borrow money but gives you hope for your financial future. You can follow the 15 easy tips above on how to improve your credit score. If you don't have a credit score yet, you can get a Camino Financial loan to learn how to manage debt and improve your future. With us you can apply if you don't have a previous credit history. Plus, we don’t require collateral, and we have limited restrictions on fund usage. We also are more flexible and have fewer requirements than traditional banks. Applying for a Camino Financial microloan will help you get closer to achieving your financial goals for yourself and your business. Increase your credit score with a loan  


    How to improve my credit score?

    The best thing you can do is follow all the tips that we shared in this article. Some of them are:
    • Pay all your debts on time
    • Don’t apply for several loans at the same time
    • Report your rent

    What is the highest credit score?

    The personal credit score goes up to 850 points.

    What is a good credit score?

    A score of 660 is good, and it can help you get approved for many different financial products. If you have a lower score, you should start working on it ASAP.

    Can a loan help me improve my credit score?

    Yes! A loan is a great tool to improve your credit score, as long as you make your monthly payments on time. At Camino Financial, we have already helped many business owners improve their scores. We also work with people without a credit history (and, depending on your case, we can approve your loan even if you have bad credit). That’s why we are one of the best options for small businesses.

    How often should you check your credit score?

    You should check your score at least once a year. However, if you plan to apply for a loan or credit card, you should check your score more frequently. This will help you understand where you stand in terms of your creditworthiness and what steps you need to take to boost credit score improvement. Additionally, if you see any discrepancies in your credit report, it’s important to reach out to the major credit bureaus and rectify the issue as soon as possible. At Experian, you can get a free credit report.

    How can you quickly boost your credit score?

    There are a few ways to raise your credit score you can do to boost it relatively quickly. One is to make all of your monthly payments on time. Another is to keep your credit utilization rate low - try to use no more than 30% of your total available credit at any given time. You can also ask for a copy of your credit report and dispute any errors you find. Finally, try to establish a long history of positive credit behavior by keeping all of your accounts in good standing.

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