How to Increase Your Credit Score

A high credit score is one of your most valuable assets, and needs to be fiercely protected. Knowing how to increase credit score your credit score helps you borrow more money, pay less interest, and score credit cards with high bonuses.

To learn how to track and improve your credit score, let’s break down each section of my personal credit on Credit Karma.

Hard Inquiries

Hard inquiries are the total number of times you have applied for credit. Any time you apply for a loan, you will be counted for a hard inquiry. This includes credit cards, mortgages, and lines of credit.

According to this credit bureau, I only have 1 hard inquiry over the past 2 years, which is extremely low.

It’s also inaccurate. Credit Karma shows credit scores from both Equifax & TransUnion, and it’s common for each credit reporting agency to have different findings. The other agency reports 8 hard inquiries over the past 2 years, which is a more accurate number.

To balance out your credit inquiries, ask lenders which credit reporting agency they use. You can also look it up on Google. For example, if you Google “which credit reporting agency does Barclaycard use”, you’ll find they use TransUnion.

Total Accounts

Total accounts calculate all of the open and closed credit accounts you have. Lenders like to see many accounts, because that means you can manage them responsibly.

It also shows that you’re diversified. If one lender decided to terminate my loan, I have 18 other sources of capital available. Since I’m not reliant on any one lender, creditors will have more confidence in my ability to pay back money.

Credit Age

Your average credit age determines how long your average loan has been active. The longer your credit age, the better you look to lenders.

As you can see for me, my average credit age is pretty low thanks to churning credit cards. By constantly adding new cards, my average credit age is lower than creditors want. This is one of the reasons why you should not churn credit cards.

Derogatory Marks

Derogatory marks will hammer your credit score. Collections, tax liens, bankruptcies, and civil judgements can all appear on this and make a significant impact on your credit score.

Pay all of your bills to make sure this stays clean, and track your reports on Credit Karma to make sure nothing comes up by mistake.

If something does come up by mistake, make sure to address it immediately. The longer an erroneous record stays on your credit report, the more difficult it is to remove it.

Credit Card Use

Lenders track how much of your credit card limit you spend. The less of it you use, the less of it you need. Creditors prefer lending money to people who don’t need it, so it’s in your benefit to keep this percentage as low as possible.

This is where churning credit cards can help. I have over $200k in available credit thanks to having so many credit cards. Therefore, I’m always using only 1% – 2% of my credit limit, which looks great to lenders.

Payment History

Payment history is crucial – set up autopay and make this automatic. As you can see, even one glitch can cause your credit score to nosedive. Don’t mess around with this.

How to Increase Your Credit Score – The Bottom Line

Your credit is one your most valuable assets. Knowing how you can increase your credit score helps you borrow more and pay less interest.

Know how to increase your credit score by focusing on the six qualities lenders track: hard inquiries, total accounts, credit age, derogatory marks, credit card use, and payment history.

Free services like Credit Karma are great for tracking your progress, and allow you to set alerts if anything changes.

The more you improve your credit, the better your financial future will be.