How to boost your credit (FICO/Equifax) score: Expert Tips

How to Boost Your Credit?

Ever wonder how to crack the code to the best possible credit score? In this video, I’m going to give you five proven ways to send your credit score to the moon, and I’ll dispel one common credit myth.

Number one: make your payments on time.

I’m pretty sure this is common knowledge, but did you know that in most cases, credit cards can be set up to be paid automatically through your bank. This is a great way to get the most important criteria checked off every month.

Number two: keep your credit card balances low relative to your credit limits.

Credit utilization is the most misunderstood concept, and many people are negatively impacted by the lack of clarity on this topic. For example, if you max out your credit card every month and yet still make a full corresponding payment, it’s actually viewed as a negative. It seems unbelievable, but it is true. Credit reporting agencies like Equifax only see a snapshot of a credit card at a point in time every month, even though the balance may be paid in full, their algorithm docks you for being at your credit capacity. If your monthly spending is fairly consistent, the easiest way to fix this is by increasing your credit limit. Another way is to make payments throughout the month to keep your balance low compared to your limit.

Number three: repeat steps one and two for as long as possible, and do not stop.

Number four: have different types of credit accounts.

This one is so insignificant compared to numbers one, two and three, I debated even bringing it up, but it does have some slight relevance.

Number five: don’t apply too often.

While this is true in some cases, it’s very misunderstood. Many people believe that pulling a credit report is always going to drop a score when, in reality, it only drops when someone is seeking many different opinions in a short period of time. A credit score could be pulled twice in the same day and not drop a single point. I believe this myth may have started by financial institutions that didn’t want their clients seeking other options, but that’s just my theory. Mortgage brokers generally only pull one report and distribute a copy as they seek the best mortgage rate and terms for their clients.

My name is Luke Wile and thank you for watching.

Video Highlights:

Five Proven Ways to Boost Your Credit Score
A step-by-step guide on how to improve your credit score, covering key strategies like timely payments, managing credit utilization, and more.


The Importance of On-Time Payments
Highlighting how setting up automatic payments through your bank ensures timely credit card payments, which is crucial for maintaining a healthy credit score.

Understanding Credit Utilization
A detailed explanation of the commonly misunderstood concept of credit utilization and how maxing out your credit card—even if paid in full—can negatively impact your score.

Managing Credit Card Balances
Practical advice on keeping credit card balances low in relation to your credit limit, with tips on increasing your limit or making multiple payments throughout the month.

Diversifying Credit Accounts
Though less significant, having a variety of credit types (such as credit cards, loans, etc.) can slightly benefit your credit score.

Myth Busting: Credit Report Pulls
Clarifying the misconception that pulling a credit report always lowers your score. In fact, multiple pulls within a short period only affect your score under specific circumstances.

Transparency in Mortgage Broker Practices
Emphasizing how mortgage brokers typically pull one credit report and distribute it to lenders, ensuring a streamlined process without harming your credit score

Takeaways

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  • On-time payments are essential to maintaining and boosting your credit score, and automatic payments can help ensure you never miss one.
  • Credit utilization—the ratio of your credit card balance to your credit limit—should be kept low to avoid negative impacts, even if you pay off your balance each month.
  • Consistency is key: continue following good credit practices (like timely payments and low utilization) to steadily improve your score over time.
  • Having different types of credit accounts can slightly improve your score but is less important than paying on time and managing utilization.
  • The myth that pulling a credit report always drops your score is inaccurate; only excessive or rapid inquiries within a short period will have an effect.
  • Mortgage brokers simplify the process by pulling a single credit report and distributing it, ensuring no unnecessary harm to your credit score during the mortgage process.
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