by Maurie Backman | Oct. 6, 2019
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Your credit score can impact more aspects of your life than you'd imagine. It can determine whether you're able to snag a loan, get approved for a credit card, rent an apartment, and, in some cases, even get a job.
Under the FICO scoring model, credit scores can range from a low of 300 all the way up to 850. A credit score of 850 is pretty hard to achieve, but once yours hits 800, it's considered excellent, which opens up your borrowing options tremendously.
How do you get excellent credit? Typically, it takes years of managing your bills wisely to obtain a credit score in the 800 range. But if you're eager to raise your score in the very near future, there are steps you can take to give it a quick boost.
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Of the factors that go into calculating your credit score, utilization is one of the most important. Utilization speaks to the extent to which you're using your available credit.
Ideally, that number should be 30% or lower. This means that if you have a $10,000 credit limit, you should never owe more than $3,000, since exceeding that threshold will drag down your credit score.
If your utilization is high, paying off some of your debt could help bring it into favorable territory. Going back to our example, imagine you owe $4,000 on several credit cards with a cumulative $10,000 limit. If you pay off $1,000 of those balances, you'll lower your utilization to 30%, bringing up your score.
Of course, coming up with $1,000 overnight is easier said than done. But if you're willing to sell some belongings you no longer need, that could help you come up with part of it. Pulling a few extra shifts at work or putting in time at a second job could also help you scrounge up cash.
The lower your utilization, the more it helps your credit score. If you can't manage to knock out a chunk of your debt quickly, another way to improve your utilization is to ask for a higher credit limit. If you're a long-standing customer with a history of making payments on time, those issuers will likely comply.
Let's look back to our example. A $4,000 balance on $10,000 worth of credit is a 40% utilization ratio, which isn't good. But if you were to raise your total credit limit to $12,000, you'd have a 33% utilization ratio instead. That's not quite down to the 30% mark, but it means you'd only have to pay down about $400 to get there instead of $1,000.
Your credit report is a summary of your financial behavior. Each of the three major credit bureaus -- Equifax, Experian, and TransUnion -- is required to give you a free copy of it every year. It pays to examine each report for errors. If you spot a mistake that hurts your credit, getting it corrected could improve your score.
It's estimated that more than 20% of consumers have a potentially substantial error on their credit report that could work against them. If, for example, you spot an outstanding bill that you never incurred (perhaps someone with the same name racked up that debt, but it got mistakenly associated with your file), proving that it's not yours could help your credit score improve.
Having excellent credit gives you a great opportunity to not only borrow money, but to do so affordably. Take these steps, and with any luck, your credit score will get the quick boost you're looking for.
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