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Published on August 13, 2018

How to Improve Credit Score Quickly with These 10 Tactics that Work

How to Improve Credit Score Quickly with These 10 Tactics that Work

It’s been months since you’ve tried improving your credit score but had little success. And since you’re planning to make large purchases soon, you start feeling hopeless.

The problem is you don’t know where to start. With too many resources available, you become paralyzed with fear. But you know you can’t sit still forever. So what’s your next step?

To learn from others who’ve already experienced success.

Take my case, for example, my current credit score is 750+, but this wasn’t always the case. At one point I had no credit and lost over 100 points. Through trial and error, plus learning from others I’ve learned which tactics work.

You don’t need complicated strategies, you only need a few that work. The tactics provided in this list are the same ones I’ve used to increase my credit score. While your credit score won’t improve overnight, it’ll improve quicker than most.

Here are 10 tactics you can use to finally improve your credit score:

1. Revise for any errors

Before you attempt to improve your credit score, check where you stand. Pull a free credit credit report and ensure that all your information is accurate. For example, check for misspellings, wrong addresses and accounts not belonging to you.

If there’s any bad information, contact the credit reporting company. To avoid any prolonged issues, aim to check your credit at least once per year. You’re entitled by Federal law to 1 free credit report from all 3 credit reporting agencies.

Download Credit Karma, or Credit Sesame to track your credit score. This will help you stay motivated as you’re changing bad habits to improve your credit score.

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2. Stop depending on credit

A major reason for having bad credit is due to carrying several credit balances. Instead, focus on paying down all your credit cards and only use one. Save money by consolidating all your credit card balances into a 0% interest credit card.

Once you’ve consolidated all or most of your credit card debt, make more than the minimum payment. Why? Because it can take years for you to pay off those balances making the smallest payment.

It can feel overwhelming keeping track of many credit cards and other expenses. Fortunately, a simple solution is to use apps like Mint to better track your cashflow.

3. Say no to new credit cards

Ironically, the better your credit score is, the more credit offers you’ll receive. But this doesn’t mean that you should open dozens of new credit cards. Limit yourself to only have 1 to 4 credit cards.

If you find that you already have more than 4, focus on eliminating ones you don’t use or have an annual fee. Many companies and stores will try to convince you to open new credit cards with a one-time cash bonus. Don’t fall for it.

4. Leave your bills on autopilot

Because you’re human, you’re bound to be late on payments at some point. A great way to avoid being late is by setting up automatic payments for your bills. Nowadays, most large banks have a “bill pay” feature that allows you to set up recurring payments.

Review your credit billing history and write down bill due dates on a separate sheet of paper. Be sure to have a good understanding of your cash flow to know how much money you’ll have left over each month. Use the remaining amount to make extra credit card payments.

Stay motivated by setting a deadline for when you’d like to be credit card debt free. Then break down your entire credit card balance by month. For example, if you’d like to be debt free in 16 months with a $5,000 credit card balance, make a $313 payment each month ($5,000/16).

Make sure to pick a date that’s attainable and one with payments you’ll be able to afford. It’s better to pay a lesser amount if you’ll be consistent.

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5. Make your bills adapt to you

Everyone’s pay cycle is different, so adjust your bill’s due date to a date convenient for you. If your bill is due on the 1st of the month but you get paid on the 7th, change accordingly.

Sometimes changing your due date is too much of hassle or not possible. In this case, consider using your credit card to make your payments.[1] But, as soon as these payments post to your credit card, be sure to pay them off.

6. Be wary of excessive credit

Keep your credit utilization below 30%. Using more credit gives the impression to companies that you’re struggling financially. Vintagesscore recommends using no more than 30% of your credit utilization.

What’s your credit utilization? Divide your total outstanding debt by your total credit. For example, if you had $3,000 in outstanding debt with a $10,000 credit limit, your credit utilization is 30%. Now review all your credit cards and calculate your credit utilization.

So when do you use your credit cards? Only to make purchases you’ll be able to pay off either immediately or within a month.

Stop depending on your credit card to make daily purchases and use your debit card instead. You’ll be less likely to make impulsive purchases and buy only what you can afford. The best part is you’ll start breaking the bad habits that got you a bad credit score in the first place.

7. Don’t abuse credit inquiries

Be wary of hard credit inquiries. These types of inquiries can bring down your credit score a few points. A few points may not sound like much, but they add up.

Hard credit inquiries are necessary for the different stages in your life but you’ll need to be strategic for when to use them.

Here are some examples of hard inquiries:

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  • Auto loan application
  • Mortgage application
  • Student loan application
  • Personal loan application
  • Apartment application

Plan ahead for big purchases. This way you’ll avoid running many hard inquiries against your credit all at once. The good news is that big purchases aren’t made often, so you’ll have time to prepare.

Set a timeline for when you’d like to make large purchases to know if your credit score is in good standing.

8. Become an authorized user

Start building credit by becoming an authorized user in someone else’s account. As an authorized user, you’ll be able to make purchases with your own credit card. But the owner will still be responsible to make payments on time.

It’ll be challenging to find someone who’d be willing to add you as an authorized user to their account. So start by asking a close relative or friend. Once added, it’s a great way to build creditworthiness over time, so be persistent.

9. Praise your credit history

Don’t close good standing credit cards. Good standing credit cards show lenders you’ve been able to make payments on time for an extended period.

Instead, if you decide to no longer use a credit card, leave it home somewhere out of sight.

Do close credit cards that are charging you annual fees or have a short history. Be sure to do this during a period you won’t be making large purchases.

10. Conquer goals with patience

The truth is building your credit score won’t be easy, but it’s well worth the effort. To stay motivated, write down your main reason for wanting to improve your credit score.

For example, if you want to buy a house, set a concrete date to work towards to. Then start researching what credit score you’ll need to buy your home. From here, break down your goal into daily actionable steps.

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A sample month can look like this:

  • Week 1: Leave credit card at home
  • Week 2: Call banks to inquire about ideal credit score to have
  • Week 3: Create a pay off date for your credit card with the lowest balance
  • Week 4: Save $10 to make a principal payment towards your credit card

Consistency is key. It’s best to start with small goals and make consistent progress. Once you start seeing success aim for bigger goals.

“Most people overestimate what they can do in a day, and underestimate what they can do in a month.” – Matthew Kelly

Make your dream purchases effortlessly

Imagine waking up to a buzzing noise. It’s your smartphone notifying you that your credit score is now 700. You smile, grab your coffee, and start your morning feeling invincible.

It wasn’t easy but with hard work and discipline, you were able to improve your credit score.

Best of all, your finances are now better than ever. You have a budget and stick to it. Amazing isn’t it?

You now have 10 proven strategies to boost your credit score. Try each tactic but remember to have patience. Increasing your credit score won’t happen overnight. But you’ll form life-changing habits along the way.

What are you waiting for? Go get em’ tiger.

Featured photo credit: Pixabay via pixabay.com

Reference

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Christopher Alarcon

Entrepreneur, Writer, and Finance Analyst

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Published on November 20, 2018

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The truth is, there are many “money saving guides” online, but most don’t cover the root issue for not saving.

Once I’d discovered a few key factors that allowed me to save 10k in one year, I realized why most articles couldn’t help me. The problem is that even with the right strategies you can still fail to save money. You need to have the right systems in place and the right mindset.

In this guide, I’ll cover the best ways to save money — practical yet powerful steps you can take to start saving more. It won’t be easy but with hard work, I’m confident you’ll be able to save more money–even if you’re an impulsive spender.

Why Your Past Prevents You from Saving Money

Are you constantly thinking about your financial mistakes?

If so, these thoughts are holding you back from saving.

I get it, you wish you could go back in time to avoid your financial downfalls. But dwelling over your past will only rob you from your future. Instead, reflect on your mistakes and ask yourself what lessons you can learn from them.

It wasn’t easy for me to accept that I had accumulated thousands of dollars in credit card debt. Once I did, I started heading in the right direction. Embrace your past failures and use them as an opportunity to set new financial goals.

For example, after accepting that you’re thousands of dollars in debt create a plan to be debt free in a year or two. This way when you’ll be at peace even when you get negative thoughts about your finances. Now you can focus more time on saving and less on your past financial mistakes.

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How to Effortlessly Track Your Spending

Stop manually tracking your spending.

Leverage powerful analytic tools such as Personal Capital and these money management apps to do the work for you. This tool has worked for me and has kept me motivated to why I’m saving in the first place. Once you login to your Personal Capital dashboard, you’re able to view your net worth.

When I’d first signed up with Personal Capital, I had a negative net worth, but this motivated me to save more. With this tool, you can also view your spending patterns, expenses, and how much money you’re saving.

Use your net worth as your north star to saving more. Whenever you experience financial setbacks, view how far you’ve come along. Saving money is only half the battle, being consistent is the other half.

The Truth on Why You Keep Failing

Saving money isn’t sexy. If it was, wouldn’t everyone be doing it?

Some people are natural savers, but most are impulsive spenders. Instead of denying that you’re an impulsive spender, embrace it.

Don’t try to save 60 to 70% of your income if this means you’ll live a miserable life. Saving money isn’t a race but a marathon. You’re saving for retirement and for large purchases.

If you’re currently having a hard time saving, start spending more money on nice things. This may sound counterintuitive but hear me out. Wouldn’t it be better to save $200 each month for 12 months instead of $500 for 3 months?

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Most people run into trouble because they create budgets that set them up for failure. This system won’t work for those who are frugal, but chances are they don’t need help saving. This system is for those who can’t save money and need to be rewarded for their hard work.

Only because you’re buying nice things doesn’t mean that you’ll save less. Here are some rules you should have in place:

  1. Save more than 50% of your available money (after expenses)
  2. Only buy nice things after saving
  3. Automate your savings with automatic bank transfers

These are the same rules that helped me save thousands each year while buying the latest iPhone. Focus only on items that are important to you. Remember, you can afford anything but not everything.

How to Foolproof Yourself out of Debt

Personal finance is a game. On one end, you’re earning money; and on the to other, you’re saving. But what ends up counting in the end isn’t how much you earn but how much you save. Research shows that about 60% of Americans spend more than they save.[1]

So how can you separate yourself from the 60%?

By not accumulating more debt. This way you’ll have more money to save and avoid having more financial obligations. A great way to stop accumulating debt is using cash to pay for all your transactions.

This will be challenging, depending on how reliant you are with your credit card, but it’s worth the effort. Not only will you stop accruing debt, but you’ll also be more conscious with what you buy.

For example, you’ll think twice about purchasing a new $200 headphone despite having the cash to buy them. According to a poll conducted by The CreditCards.com, 5 out of 6 Americans are impulsive spenders.[2]

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Telling yourself that you’ll have the discipline to not buy things won’t cut it. This is equal to having junk food in your fridge while trying to eat healthy–it’s only a matter of time before you slip. By using cash to make your purchases, you’ll spend less and save more.

A Proven Formula to Skyrocket Your Savings

Having proven systems in place to help you save more is important, but they’re not the best way to save money.

You can search for dozens of ways to save money, but there’ll always be a limit. Instead of spending the majority of your effort saving, look for ways to increase your income. The truth is that once you have the right systems in place, saving is easy.

What’s challenging is earning more money. There are many routes you can take to achieve this. For example, you can work long and hard at your current job to earn a raise. But there’s one problem–you’re depending on someone else to give you a raise.

Your company will have to have the budget, and you’ll have to know how to toot your own horn to get this raise. This isn’t to say that earning a raise is impossible, but things are better when you’re in control right? That’s why building a side-hustle is the best way to increase your income.

Think of your side-hustle as a part-time job doing something you enjoy. You can sell items on eBay for a profit, or design websites for small businesses. Building a side-hustle will be on the hardest things you’ll do, be too stubborn to quit.

During the early stages, you won’t be making money and that’s okay. Since you already have a source of income, you won’t be dependent on your side-hustle to pay for your expenses. Depending on how much time you invest in your side-hustle, it can one day replace your current income.

Whatever route you take, focus more on earning and save as much as possible. You have more control than you give yourself credit for.

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Transform Yourself into a Saving Money Machine

Saving money isn’t complicated but it’s one of the hardest things you’ll do.

By learning from your mistakes and rewarding yourself after saving you’ll save more. What would you do with an extra $200 or $500 each month? To some, this is life-changing money that can improve the quality of their lives.

The truth is saving money is an art. Save too much and you’ll quit, but save too little and you’ll pay for the consequences in the future. Saving money takes effort and having the right systems in place.

Imagine if you’d started saving an extra $100 this next month? Or, saved $20K in one year? Although it’s hard to imagine, this can be your reality if you follow the principles covered in this guide.

Take a moment to brainstorm which goals you’d be able to reach if you had extra money each month. Use these goals as motivation to help you stay on track on your journey to saving more. If I was able to save thousands of dollars with little guidance, imagine what you’ll be able to do.

What are you waiting for? Go and start saving money, the sky is your limit.

Featured photo credit: rawpixel via unsplash.com

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