How To Improve Your Credit The Fastest Way Possible

Hey Wealth Builder! Welcome back, and I’m sure you’ve set up those minimum payments to ensure you’re paying your bills on time, but there are a few things you need to understand if you want to improve your credit score faster.

Let’s discusss the 2nd most important aspect of improving your credit.  That’s your amounts owed or utilization! 

For the remainder of this lesson, I will just use the word utilization.

There are several ways to improve utilization and gain all 30% or 165 points in the credit score algorithm.

Let’s first start off by defining what I mean when I say “utilization.”

I’m talking about the difference between your total available limit and current balances on all of your debt, but primarily revolving debt.

Revolving debt are things like credit cards and home equity lines of credit.

For example, if you have 3 credit cards.

Card 1 has a $5000 limit with a $2000 balance
Card 2 has a $500 limit with a $300 balance
Card 3 has a $2000 limit with a zero balance

Then you have a total limit of $7500 ($5000+$500+$2000) and a total balance of $2300 ($2000+300+0).

Your total utilization percentage is your total balance divided by your total limits * 100

So that’s ($2300 / $7500) * 100 which equals 30.66%.

You have a 30.66 utilization percentage, and we need to get that to 10% or lower.

Sidebar…

Did you know that if you want the best possible credit score, you need to have between 1% and 10% utilization on your credit cards and other revolving debt?

Having 1% utilization on my revolving credit is a major factor in why my credit score is one of the highest in the country. It’s a common myth that you should be at 30% utilization on your credit cards.. Well not if you want to drastically improve your credit score.

Going back to our example..

We have 3 options to get our utilization to 10% and lower.

Get bigger limits
Paying down balances
Get bigger limits and while paying down balances!

I recommend option #3 from the list above!

The 3rd option gives you the added advantage of having another data furnisher send on-time payments to the credit bureau, so you get a double credit improvement whammy.

Here are two guaranteed approved options for boosting your credit. I recommend that you do all 3.

Think of this as if you’re training for a marathon. The goal is 26.2 miles and being victorious, but we just need to get a few miles out of the way in preparation for the big event.

By doing options 1 and 2 above you will have added at least $10,200 more in credit card limits to your profile and at least two more data furnishers saying you’re paying on time and worthy of a credit score increase.

What does that do to your utilization % now?

Going back to our example from above (when we had $7,500 in total limits)

Now you have $17,700 in total limits ($7,500 + $10,200) and $2300 in balances which gives you 12.99% utilization!

You just went from 30.66% utilization to 12.99% utilization, and you did that  in less than 10 minutes by following directions above .

You now just need to have a game plan to pay down your balances to no more than $1,770 and boom we hit 10% ($17,770 total limit x10% = total utilization of 10%).

Ok, so I purposely used a lot of math in this lesson to prove my point.

Why did I do that? I wanted to show you that the numbers never lie.

Improving your credit score isn’t rocket science, it’s simple math and execution

You now just have to answer the question

How do I get my credit card utilization to under 10%.

If you have zero credit cards then just follow the steps above and boom! Instant credit score boost!

There is nothing special about maximizing all the points you can gain in the credit score algorithm. There is no trick. It’s all math!. If you implement what I told you in this less you’ll have a nice boost to your credit in no time.

Bonus Lesson #1 (VIDEO EXPLAINING WHY THIS WORKS!)

Today’s exercise is simple… Pull out all your credit card statements.

Write down the card name, limit and balance then calculate your total utilization. After you get the two cards above, recalculate your utilization percentage to figure out how much you need to pay off to get it to 10% but keep in mind your goal is 1% utilization

P.S. If you do not have credit cards just complete the credit building action items above.