3 Easy Ways to Increase Your Credit Score in 2022

In this article, I'm going to discuss the three important factor to raising your credit score quickly. These are all things that I have done personally and you'll know how important good credit is to your financial success borrowing money becomes way cheaper and you can begin to leverage it by using OPM other people's money. 

How is your credit calculated?

So your credit score is calculated by your payment history, which has a 35% impact on your overall score your amounts owed, which has a 30% impact your length of credit history which has a 15% impact on your overall credit mix which has a 10% impact and new credit which also has a 10% impact. Now that you know what's impacting your score.

Tip No 1

The first hack for you to start improving, it is going to be knowing when to pay your credit card bill or specifically paying off your credit card early each month so that when the credit companies send the reports to the credit bureaus, it shows that your balance is zero. That's to give you an example of this. 

Let's say your credit card due date is on the 24th of each month and the credit company must send the reports to the Bureaus on the 21st of each month. The issue that happens when you decide to pay off your balance on the 24th is that the credit card companies already sent your statement to the Bureau which shows a bounce even though you technically paid it off by the credit card due date. 

So simply put, even though you aren't necessarily late in paying off your credit card, it may still show a balance on the statements that the credit bureaus received. And that's why paying off your credit card before it's due date can result in a higher credit score, because you'll be playing along with what the credit bureaus are seeing as well. 

Paying a credit card off early can be a way for you to kind of hack the system and always make sure that you're showing the lowest credit utilization possible to the Bureaus. Now another reason why I would recommend you pay off your credit card early is that let's say you had something come up this month, and you just don't have enough money to pay it off. 

Well, in the case of something like this happening, let's go over how your interest gets determined. Your interest payment is determined by something called your average daily balance, which means that if you had $1,000 on your credit card and waited till the end of the month to make a payment of $500 because that's all you had.

You essentially pay interest on an average daily balance of $1,000 for the month versus if you took that same $500 and pay it off earlier in the month, you'd reduce your average daily balance by about half.

Which would save you money on interest in the long run. So if you're someone who can't fully afford to pay off their credit card debts, but you can pay a good chunk of it or even just some of it, making sure you properly allocate those funds couldn't make sure you get the biggest boosts possible.

Tip No 2

The second hack you can do to boost your credit score is by joining someone's credit account as an authorized user. Now the trick here is to join someone's account that has a strong credit history because their credit history will carry over onto yours. This is because most credit bureaus track authorized user activity in their annual reports.

However, it's worth noting that this really only provides a major benefit to people who have little to no credit history and are looking to build up a good score quickly. And people who already have a long credit history may have a hard time seeing a big jump in their credit score when using this method. 

So if you're looking to be an authorized user under someone's account, there are a few different people you should go to first if you have a parent with a strong credit history We actually recommend going to them and seeing if they consider making you an authorized user. 

This would just be a really quick and easy way to get added to someone's plan. And since they're your parents, you don't have as much to worry about compared to if it was someone else. Another potential way to become an authorized user would be to go through an employer.

Oftentimes, employers are willing to do this because not only does it result in them racking up more reward points, but it makes it easier to handle reimbursements. And if the job requires employees to travel, you'll also receive access to travel perks associated with the credit card.

So this means you can get access to travel lounges receive priority boarding, free check bags, rental car insurance, and much more. However, it's important to keep in mind that business credit cards do not report to personal credit lenders. So this will only work if the business owner is using a personal credit card. 

I've also seen people benefit from becoming authorized users on a spouse or partner when one person has no credit history and the other one does. This quick boost to your credit score could also help towards qualify for a mortgage on a house together, which is another form of credit for you to add to your overall credit mix. 

This is actually a super beneficial step. And I've personally seen real estate clients of mine use this method and go from not qualifying for the home they want to qualify just a few months later. But you must be careful because not only can becoming an authorized user help your score, but it can also tank your score if the person that is adding you as the authorized user has bad credit of their own. 

So if they actually miss a payment, that missed payment is going to show up on your credit report. So yeah, just be careful who you trust and make sure that they are very financially responsible. 

Tip No 3

The third and final hack that I have for you guys is going to be asking for a credit limit increase. Let's say you get approved for a credit card a while back and it has a low limit on there.

Because you're just starting out your credit journey. If it's been a decent amount of time since then, and your financial circumstances have changed, you'll most likely qualify for a credit line increase. 

And since your overall credit utilization accounts for 30% of your score, this can give you a nice boost as well, especially if you find yourself continuously going over 30% utilization on your card every single month. However, you should only apply for a credit increase when it's likely that you'll be accepted. 

Some car companies actually do a hard inquiry or a hard pull on your credit to decide whether or not to give you the increase, which can actually negatively impact your score in the short term hard Polls can only affect your credit for up to one year though. And after two years, they get removed from your record. 

So to give you some examples of banks that do hard pulls, those are going to be Chase, Barclays, Bank of America, US Bank, and USAA. And the banks that don't do any hard pulls when requesting a credit line increase are American Express, Capital One, and Wells Fargo. 

Some other things to note are that when you call an Ask city for an increase, they'll tell you whether they'll do a hard or soft inquiry beforehand. So you can actually decide if that's something you want to do after finding out and the call itself won't affect your score and discover will usually do a soft inquiry. 

However, let's say you're not happy with the increase that they offer you because you think it's too low and you ask for an even higher one discover will then do a hard pull on your credit history to decide whether they will grant you the additional increase. Just keep these things in mind when signing which card to apply for an increase with.

Another scenario is where it may be beneficial to apply for a credit increase if you keep getting denied when applying for new credit cards and receiving higher credit limits. In addition to a simultaneous boost in your credit score points may be what you've been needing to start qualifying for more prestigious cards, mortgages, car loans, and things of that sort. 

On top of that having more credit extended to you will allow you to earn more rewards plans for bigger purchases better and give you extra financial resources in case of emergencies. The last thing to note about credit increases is that the issuers do send out automatic increases from time to time, which don't result in hard or soft polls on your report. 

However, increases typically don't get offered until at least six months after opening the account. And they typically aren't extended more than once within a 12-month period. This is what I want to mention again, how important it is to really only put things on a credit card that you can afford to pay off. 

Obviously, if you need to put something on there that is an investment in yourself and your work then it may be worth paying for it. I've invested a lot of money into bettering myself over the years and I can 100% say it was worth every penny. But what I'm really talking about is things like going on shopping sprees, paying for labs, vacations, unnecessary subscriptions, that kind of stuff. 

These can be easy ways to rack up big balances on your credit cards. So make sure to not let those kinds of things get too out of hand and always check yourself when it comes to this. 

The last thing I'll say about this is that credit is a huge tool in America and it's one of the things that makes this country so awesome with a good credit score. You can qualify for a good mortgage on a home get good interest rates on car payments and Business Loans receive free money from rewards programs and a lot more.

Entrepreneurs leveraging their credit to build a fortune is nothing new to America. And it goes back to my point of what makes this country unique. Americans leverage their credit on all levels of society, whether it's for the entrepreneur who is using his or her credit to buy another company.

Whether it's for the smaller scale investor who leverages their credit to get things like a good mortgage on a home or good car payments and then use the money they would have put towards paying those items off into other ventures that will make more money in the long run. That's why credit is so important.