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Credit Scores

How to Raise Your Credit Score by 200 Points

By Guest Contributor

Credit Knocks guest contributor. See guidelines.

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Summary: Raising your credit score 200 points is possible if you follow the steps in this article.

raise credit score 200 points

Today’s financial world is built upon credit and one of the most important factors that determine your ability to raise credit is your business credit score.

It is one of the most essential parts of your financial life. A good credit score, besides facilitating you in borrowing money at attractive rates, plays a role in determining your insurance premium.

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Increase Your Credit by 100+ Points

In a recent study at Credit Knocks, we found that *48% of clients who used a credit repair company got a credit score increase of 100+ points.

Consultation is quick, easy, and free.

According to FICO, 10% of your credit score is based on credit mix while 35% is based on your payment history, 30% on the amount of outstanding debt, 15% on the length of credit history, and 10% on a newly opened line of credit.

Here are some tips and tricks for raising your credit score by 200 points:

1. Analyze Your Credit Report

Your credit score is a three-digit number that is based upon the data in your credit report. Your credit report is a comprehensive documentation of your credit information, balances, payments, personally identifying information, etc.

Since your credit score reflects your financial history, it is important to go through it carefully and rectify any discrepancies. Even minor errors can have an adverse effect on your scores and make you appear an unreliable borrower. This, in turn, would damage your chances of obtaining credit.

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You should ensure that there are no personal information errors. Look out for wrong addresses, phone numbers, and any other mistake in personal information such as bank account numbers.

Once ensuring the veracity of your personal information, you should verify the accuracy of your balances and credit limits stated in the report.

Further, you should also ensure that the reports reflect the exact status of your accounts. For instance, you may find closed accounts listed as being open.

2. Do Not Indulge in Late Payments

Your payment history constitutes the largest chunk of your credit score. Falling behind your payments on past loans is likely to have a substantial effect on your credit score.

It would be advisable to get back to speed with your payments and ensure that you repay your remaining loans in a timely manner.

A late payment can lead to a decrease in your score by as much as 75 points. So, be diligent with your loan payments to ensure that it does not get in the way of a good credit score.

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3. Pay Down Your Existing Debts and Retain Low Balances

A poor debt-to-credit ratio could be detrimental to your credit score. A debt-to-credit ratio is an amount that you borrow from the total credit available to you. Therefore, it becomes important to pay down your existing loans.

It can be challenging to execute this to boost your scores, especially if you happen to have a large credit card balance. But, this can be a vital aspect in your journey to improve your credit score by 200 points.

Lenders often prefer to a small debt-to-credit ratio, as it reflects that you are responsible with your credit. An easy way to boost your ratio would be to increase the limits on your credit. For instance, if your credit limit is $100 and you use $50, your utilization would be 50%.

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On the other hand, if your credit limit is $1000 and you continue to use only $50, the utilization rate would be 5%. The only thing that one needs to be careful about while doing this is to not increase spending while raising the credit limit.

4. Diversify Your Credit

Employing various forms of credit can give your credit score a boost by increasing the diversity of your credit sources, especially if most of your credit is mostly revolving credit such as credit cards. For instance, you can increase your credit score by taking a personal loan, as it would improve your credit mix.

Since a personal loan is also an installment loan, it would not only improve your credit mix, which constitutes 10% of your credit score, but also address “new credit”, “length of credit history”, and “payment history” categories and make up 60% of your credit score.

This would happen because regular payments for your installment loan would create a positive payment history while elongating your existing credit history. However, it’s advisable to only take a small loan for such purposes to not overwhelm yourselves with the responsibility of paying a loan beyond your means.

5. Restrict Credit Inquiries

When you apply for any type of credit, lenders usually do a credit check on you. This results in a hard inquiry on your credit report and is done at the time of application for a personal loan.

A hard credit check occurs when you give any company permission to check your credit. When lenders employ a hard inquiry, your credit score will decrease temporarily.

credit knocks logo

Increase Your Credit by 100+ Points

In a recent study at Credit Knocks, we found that *48% of clients who used a credit repair company got a credit score increase of 100+ points.

Consultation is quick, easy, and free.

The dip from a single hard inquiry lasts only a few months; however, too many hard dips can do substantial damage to your credit score.

You can avoid this situation by limiting the number of your credit accounts and spacing out credit inquiries over a long period.

Final Words

Raising your credit score is not a matter of a few minutes or does not happen overnight.

You need to put continuous efforts and adopt the right strategies to raise your credit score.

Sapna Singhal is a Senior Content Writer at My Banking Information which is a Financial Blog that teaches non-financial people how to invest and also about finance in a simple and easy to understand way.

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