How This Man Increased His Credit Score by 200 Points
How to Increase Credit Score by 200 Points
Do you know that you can increase your credit score by 200 points? Increasing credit score by 200 points is really a great feat. How did somebody with a credit score of 544 suddenly grow it to 745 within six months? This is the secret I will like to share with you in this article. This is a life story from one of my long time friend. Although I may not use the real name of the person involved. The reason is that I don’t have such permission. For this reason, I will just prefer to use the name “Mike”.
When Mike shared his story with me, I was very excited as if it was my own credit score that just enjoyed a boost of 200 points just within six months. Immediately he finished the story, I didn’t hesitate to tell him that I would like to publish his story on my blog. Initially, he was very reluctant as he is the kind that usually like to maintain low profile. He doesn’t like much visibility. He has been like that since I knew him. However, after much persuasion, he agreed to my request but with the condition that I will not publish his name. Therefore, I will like to keep my own part of the agreement by using just the name “Mike”. I believe he will read this article too. So, he will know that I didn’t breach my promise.
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It has actually been like a year thereabout that we last met. Although we talked on phone at times, our conversation could not be as detailed as when we met face to face. Therefore, I was not too surprised that he didn’t know that I now have a blog on personal finance. We actually discussed a lot of things but I will not bother you with them. The only thing I think that can benefit you from our conversation is how he increased his credit score by 200 points within six months. I can’t even remember what led to that topic. Perhaps it was when I mentioned that I now write articles on personal finance that our conversation drifted to the topic. So, I will like to share his experience on how he increased his credit score by 200 points within six months with you.
Mike is very comfortable as far as financial issues are concerned. He is an engineer with good perks. I will say that money is not his problem. He can afford to pay his monthly bills in cash. For this reason, he didn’t see any reason to own a credit card initially until like three years ago when someone told him that he would need credit card to build his credit score. Even though he didn’t want to yield to such advice, he later did. He was convinced when the person mentioned to him that he would need a good credit score if he planned to apply for mortgage in the future. That was how Mike applied for his first credit card. In fact, he didn’t have problem getting the credit card as he earned good income and has been working with the same company for the past two years.
After getting the first card, he got used to the convenience that credit cards provide. Not long after, he heard about reward credit cards. He got two different reward credit cards. The first one was cashback reward credit card while the second was airline reward card. I don’t need to mention the card providers because this article is not to promote any card but just to share knowledge with the readers. In order for Mike to maximize the benefits of these reward cards, he ensured that he used up almost his credit limits every month. In fact, according to him, the benefits have been very fantastic. Because money is not a problem to him, he always ensured that he paid off the credit cards’ full balance at the end of every month. For this, he didn’t see any reason why his credit score should be as low as 544. He didn’t owe any debt and he has a very good income. He was banking on his good income level but this does not count at all as his income is never a criteria for the calculation of credit score. His turning point was when he approached a credit repair company. Fortunately, he was able to locate a good one.
The first thing he did thereafter was that he applied for his credit report.He was able to get free credit report from AnnualCreditReport.Com. From his credit report, it could be seen that he had a very good payment history. His main problem was about his credit utilization. He was maxing out his credit card by utilizing about ninety five percent of his credit limit every month. Unfortunately, credit utilization is the second largest element that goes into how credit score is calculated. If your credit utilization is high, it means that you don’t much credit available for use. This can be a red flag to lenders. It suggests that your finance is under pressure and that you will likely miss payment or not be able to pay back your loan. This may even deny you a new credit.
So, Mike was advised to stop maxing out his credit card. As a matter of rule, he was advised to keep his credit utilization under thirty per cent. If by any reason, he overshot this level, he would make some payment on the card balance before the end of the month. This helped him keep his card balance relatively low at around ten per cent at the end of the month. For the first time, he understood two things. One, it is the balance on the credit card at the end of the billing cycle that is reported to the credit bureaus. Two, even though you make full payment at the end of your billing cycle while you continue to max out your credit card, you may not be able to improve your credit score. Making full payment will only help you achieve good payment history. But when it comes to credit utilization, you have failed.
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By the time Mike complied with this new rule he just discovered for six months, he was able to increase his credit score by 200 points. Experience is the best teacher indeed. In fact, he was practically teaching me what anybody in his situation can do to increase his credit score by 200 points within six months. It has worked for him, he believes that the same will work for anyone that employs the same strategy. Therefore, if you are having a bad credit, the solution to your bad credit may simply be to change your lifestyle or spending pattern. That is, how you use your credit card. Maxing out your credit card will not help you build your credit score. If you have been maxing out your credit card, keeping your credit utilization below thirty per cent may be the magic you need to turn the whole things around for you. If you do this, possibly you will soon be telling the story of how you increase your credit score by 200 points in six months too. If your find this article useful, don’t hesitate to share it with your friends and colleagues. They will be glad you did.