How one person raised their credit score by refusing more cards, making more payments and using a balance transfer.
I’ve seen my score go up 30 points in 2 months. Just by following more “responsible” behavior with my credit cards. I’ll walk you through what I did.
I’m not even sure how my credit score got so low. (It was down to 600.) I know I missed a few payments, and I maxed out a couple cards. For a while, I wasn’t really paying attention, and before I knew it, my credit score had slipped.
I thought it was smart to build as much credit as possible. Take every card that’s offered, use them to their limits and make minimum payments. I thought that was the right way to use credit cards.
But that’s all wrong. Credit reporting agencies actually want us to use only 30% of our credit limit. And opening several cards within the same year throws up red flags. They don’t see that as “responsible” and will ding your score.
They’re also watching your loan applications. Not just your cards. So any time you apply for credit gets reported on your credit report. If you’re shopping around, try applying for a few loans within a 2-week period, so they show up during the same reporting period.
It’s kind of an open secret. Credit reporting agencies really notice when you make more than one payment in each billing cycle, especially if you end up paying the full balance.
Making multiple payments between due dates is considered “responsible” behavior. It’s kind of a hassle. I had to do it manually, making payments my bank.
I don’t think the card companies want us to do this, because we’re more likely to pay on time and they’ll make less on late fees and interest charges. But credit bureaus are on board.
I never understood how balance transfers work. But it’s pretty simple. I had to get my score up to 680, but once I did, it made sense.
Here’s how you do it: First find one with an interest rate lower than your cards charge. (I searched online.) Then transfer the balance from your high-interest rate cards to the new balance transfer card.
My new card made the transfer easy, and now I make monthly payments on that new card just like any credit card. But I’m paying less in interest charges and I’ve freed up credit on my other cards.
Alslo, because I’m paying less on that balance transfer card, I can budget more to pay down my other cards. It’s a good deal all round.
Credit bureaus are looking at your behavior every 2 to 4 weeks. Even people like me with a low credit score. If you change your behavior and start making moves they like, they’ll notice and boost your score back up.
Getting a healthy score can take some time, and I still have more work to do. Credit bureaus need to see that you’ve acted “responsibly” over several months before moving your score substantially. But it’s never too late to start!
Bright can help get you debt-free by managing your card payments for you. With a personal Bright Plan, we’ll use our patented MoneyScience™ to study your finances and make smart payments, always on time and optimized to get you debt-free fast.
If you don’t have it yet, download the Bright app from the App Store or GooglePlay. Connect your checking account and your cards, set a few goals and let Bright do the rest for you!
With a postgraduate degree in commerce from The University of Sydney, Pranay has his finger on the pulse of the finance industry. Breaking down complex financial concepts is his forte.