According to a recent New York Fed survey, Americans are feeling positive about their ability to get credit. Looking at the trends, we indicate some easy actions to take and will show you how to raise your credit score quickly. In February 2015, the number of people applying for credit cards is up 12.45% from October 2013 and the rejection rate is down 5.55% from the same time periods. That is interesting to know, but you may be asking where the big trend is. That would be in credit limit increases. The number of requests for credit limit increases is up about 10% from 2013 while the rejection rate is down 35.4% from a rejection rate of 37.6% to 24.3%. If you are looking for a quick way to help raise your credit score, it looks like now may be a good time to ask for a credit limit increase.
A credit limit increase can help you and your credit score in a number of ways. First, it gives you more credit spending power. A raise in credit limit may mean that you are simultaneously getting a higher credit score. With a raised limit and no increase in new debt, you just lowered your credit utilization. So, what is that? Your credit utilization makes up the part of your score called “amounts owed”, and that accounts for around 30% of the scoring formula. Your credit utilization shows how much actual credit you are using compared to how much is available to you. So, with all things being equal and no new debt, your utilization lowers, which is a good thing when your credit limit increases. How about that? So, we are looking at a trend of a lower rejection rate for credit limit increases. If it has been a while since you last saw an increase, now may be the time to call your card company and ask.
So, with the ups come the downs in the data world. So, what's down on this report? As mentioned earlier, the number of rejected card apps is down nearly 6% since October 2013 as well as involuntary account closures, which is down 29.27% since 2013. And, of course, should I mention again that the rejection rate for credit limit increases is down a whopping 35.4%?
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It looks like the trends will be continuing with more people asking for credit limit increases over the next 12 months. It is also predicted that there will also be a rise in the number of people applying for credit cards over the next year.
In the 2015 Chase Slate Credit Survey, one sees that although 90% of Americans think that access to credit is important, less than 40% actually know their credit score. But, even more disturbing is that over 50% don't know the primary driver for credit score. So, let's see if we can help lower that number. The primary driver of credit score is your payment history. The more on time payments you have and the less delinquent payments, the better the payment history. Having a great payment history helps the most in determining your credit score. If you did not know that before, now you do. You would no longer be part of that over 50% statistic.
These are the primary drivers of the credit score formula.
Your payment history. When looking at your credit report these are the 0s, 1s and other numbers that go across the page over time. You want as many 1s as you can get, which means account current and paid on time.
The next one is the credit utilization or credit already used. You want to stay under 30 percent of your available credit to help qualify for higher credit scores.
The next driver is the negative information found in the Public Record such as bankruptcies, collections or judgments. Needless to say, you do not want these words to appear on your credit report.
If you are just establishing credit or are in the process of rebuilding your credit after some financial troubles, one great way to work on your credit score is to apply for a secured card. It does require a deposit, but it is great for starting out or rebuilding. We have some great cards listed on our Best Credit Building Cards page. You may also find a card or two that is available to those with lower credit scores that do not require a deposit, but those are typically harder to find and may have higher rates than many secured cards. But, if you do not have the money to deposit, the Milestone Gold MasterCard found on that page is an option to consider.
To wrap up, applications are trending up, rejections are trending down and credit limit increase rejections are really trending down. So, to answer the question of how to raise your credit score quickly, within reason, ask for that credit limit increase and see if you can't qualify for a new card so that you can improve your credit utilization and raise that score. Along the way, stop by sites like BestPrepaidDebitCards.com to collect some great information about credit and tips to improve your score.
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