Here’s the second part of the Increase My Credit Score series. In this post, we will talk about five habits to increase your credit score. There are no “special tricks” when it comes to increasing your credit scores. The only trick that can help you maintain and improve your credit score is knowing how credit scores work and having good money habits.

 Last week, we explored Everything You Must Understand About Credit Scores, hoping it lighted up your knowledge on credit scores. If you haven’t read it yet, I highly recommend that you click on that link and read it before you continue reading this post.

Whether you’re planning on buying a house in the future, buying a car or getting a loan, it’s always good to have your credit score in check. Therefore, I will share the five habits that have helped me increase and maintain my credit score in the Excellent bracket. If you, too, implement these simple habits, you will increase your credit score.

Here are the five habits to increase your credit score:

Habit #1: Verify your credit score every month.

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Borrowell

Just like when I budget, or before buying anything, I regularly check my bank accounts. This habit helps me see the money available, and I always know if I’m getting into bad money habits and when to re-adjust. I always end up changing my mind if my purchase is just a “want” and not a “need.”

So when checking my credit score every month, this helps me figure out the remaining of my debts, which debts I should focus on paying off and if the bank made a mistake on my payment history. 

I highly recommend that you verify everything on your credit report each month. If you see an error on it, you can always call the credit reporting agencies, and they will tell you what you should do. The good thing about checking your credit scores every month is to motivate you to pay your bills on time.

Habit #2: Always pay your Credit card on time and more than the minimum payment required.

Working at the bank or a credit card company helps you understand how credit score works. As explained in the first blog post of the Increase My Credit Score series, I work at a credit card company for a year, which helped me manage my credit score wisely. I didn’t fully understand the hype behind it, but I learned two things.

• Pay your credit card in time:

The most significant factor that hurts your credit score but will help you increase it is when you pay your bills on time. Because payment history counts for a big part of your credit score, you want this to always appear green in your credit report.

• Always pay more than the minimum payment.

When you pay your credit card in time and pay more than the minimum payment required, this will increase your credit score. I noticed that this is one of the habits that increased my credit score.

There are many benefits that you can get from paying more than the minimum payment. The first one is this will help you pay off your credit card in full. It will also help you maintain the 30% room utilization.

So, if you can only make that minimum payment on your credit score, please do. Also, note that you can make multiple payments on your credit score before the payment date. When I first understood this, I always paid the minimum when my statement came and then I would pay more whenever I could.

Habit #3: Don’t use more than 30% of your credit utilization room.

As explained in the last post, you must be aware of your credit utilization. Some people say that it must be below 35%, but we suggest that it be below 30%.

To know your credit utilization percentage, you must do simple math using a calculator (I always use my calculator). You add all of your credit card limits, and you add all of your balances. Then you divide your balances with your credit card limits multiply by 100. For example, if you have two credit cards and the overall limit is 8000, your balance must be below 2400 (2400/8000×100 = 30%). 

Credit utilization is also one reason why your credit score might decrease slightly, so pay attention to it. Always make your payments on time and pay more than the minimum payment. I even dare you to pay off the full balance; this will dramatically increase your credit score over time.

If you know that you’re unable to pay off the full balance, make sure that your balance is as low as possible before the statement comes out. When your credit score statement is out, the last statement’s amount is usually what’s in your credit report.

Habit #4: Be conscious of your inquiries.

Requesting a loan or a new credit card can be tempting. However, this will hurt your credit score if you keep asking for credits. When you intentionally want to increase your credit score, I recommend getting in the habit of paying off your debt in full and on time.

When your bank sees that you handle your credit card well, they will offer a credit limit increase. When the credit limit increase or Line of Credit is offered, your credit score isn’t affected by it. It’s better to have a higher credit limit than having more than multiple credit cards.

I only have one credit card with a limit that I can pay off quickly. However, I recommend having two credit cards—one credit card with a limit of $500 (for online transactions). And the second with a limit of $1,000 or higher.

The idea behind this is to prevent fraudsters from taking more than $500 out of your card. I have been frauded multiple times, and I can tell you that they will go as high as $600 or even more when they use your card. If you put your credit card information online, you will be less stressed if you use one credit card with a low limit.

The other one with a higher limit, you can use it for big purchases but not online purchases. I know that everything is online now, so it’s a bit hard. However, this will help you spend less and with caution.

Habit #5: The older your credits, the most valued.

One of the things that lenders look at when they check your credit score is the history you have with your credits. This applies more to credit cards because we tend to go for the ones that give points and benefits. If you’re someone with many credit cards and would like to cut some of them, I suggest that you cut the latest ones and keep the older ones.

The reason behind this is, the lenders want to see if you are loyal to your debts. They want to see your payment habits. For example, they will see a trend in making your payments.

You must understand this because you must consider once you get into the credit reporting habits. This method helps your credit score go up over time.

Bonus on increasing your credit score

What I noticed when I paid attention to my credit report and credit scores over the years:

To be in the Excellent credit score bracket, you need to have at least three credits in your credit report. I had my dad’s car, student loans, and one credit card. They were all paid on time, and sometimes I would pay the credit card in full.

Today, I have four credits in my credit report:

In 2019, the bank offered me a Line of Credit. I tested the Line of Credit to see how it works. Once I took the money out, I waited for the statement to come out and then I paid it in full. 

Always pay off your credit card in full:

Paying off your credit card in full is highly recommended. I started paying off my credit card in full before the statement date, and my credit score increased drastically.

Set up automatic payments:

The bank takes the car loan, telephone bills, and student loans automatically out of my bank account. This method has always helped because I have never missed one payment, and I don’t have to stress making the payment on time. 

Wait for that offer from the bank before 

I suggest that you wait for the bank to offer you a higher credit or product.

To finish, if you REALLY want that HIGH credit score.

It would help if you planned it out. You must know which credit score bracket you wish to belong in; this is critical. So please write it down as a goal.

When that’s done, pick the habits you will have to implement to increase your credit score. The link for CreditKarma and Borrowell are mentioned above, create an account.

The information on this post is purely coming from my own experience. My advice here is to commit for at least a year in increasing your credit score. Remember, there are no magic tricks here. Stay loyal to your money, and use your credit card wisely.

Well, that’s all for now. If you need advice on how you can increase your credit score, feel free to contact me via e-mail or Instagram.