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Published: Tuesday, April 17, 2018 @ 6:00 AM
As a Credit Karma member, I frequently check in to see how my credit is doing and make sure there’s nothing suspicious going on there.
I really like Credit Karma because it’s free, provides detailed information about changes to your credit score, you can link all your accounts to monitor your debt to savings ratio, and they even provide suggestions for financial products to apply for and why.
Another great feature I like to play around with is my spending. When I connect my bank account, I can categorize each transaction and see where all my money is going, which gives me a clear view of my spending habits.
One day when I logged in to my account, I was very excited to see that my credit score had increased almost 100 points! I had managed to raise my credit score by 92 points in just one month. I know the types of actions I’ve taken to improve it, so below I’m going to share with you the steps I took to improve my credit so hopefully you can improve your credit, too, if that’s a goal.
The major contributing factor to improving my credit score in just 30 days was decreasing my credit utilization ratio. I lowered my utilization by 19%!
I accomplished this in two ways: First, I was paying more than the minimum amount due on my credit cards (which I do anyway, but I put forward a little extra than usual, approximately $25 more than required). Next, I simultaneously increased my available credit by half on one of my credit card accounts by accepting a credit line increase offer on my account. I would definitely suggest everyone accept their pending credit line increase offer, if available — just be smart enough not to use it!
It’s suggested that you request a credit line increase about once every 6-12 months. Why? It helps with your credit utilization ratio, which helps your credit score. Your credit utilization ratio is the amount of debt you have divided by the total amount of credit you’ve been extended. Sign into your credit card account online to see if a credit limit request is waiting for you, or call the number on the back of your card to learn more about your options. The suggested utilization ratio is 30% or less on each individual account and all accounts combined.
Another major contributing factor is my perfect track record of on time payments. According to Credit Karma, I have a 100% record of consistent, on-time payments. I manage to never miss a payment by maintaining my own personal ‘bills’ calendar, which tells me when all of my bills are due. I even set reminders one week early to allow room for any mistakes.
It may be more helpful to auto schedule payments at the beginning of the month on all of your accounts that allow that option so you won’t have to worry about it for the remainder of the month. If your income is steady enough and your account never hovers around zero, I would definitely suggest setting up auto bill pay for recurring monthly payments.
What is considered a good credit score?
According to the Fair, Isaac and Company (FICO), the creator of the three-digit score used to rate your borrowing risk, the higher the number, the better your credit score. The FICO score ranges from 300-850. A good credit score is typically in the range of 720-740 and above.
Your credit score is made up of 5 different factors that all impact your score in a different way.
I believe my credit score significantly increased because credit utilization has a really high impact on my overall credit score. Also, as mentioned above, I have a perfect payment history, which makes up the largest portion of my overall credit score.
Credit Karma uses TransUnion for their credit scores. Since all scoring models are not the same, my score may have changed in different ways with the other two major credit bureaus, Equifax and Experian. I think it’s also important to stress that you can do exactly as I did to a “T,” but your score still may not change in the exact same manner. Everyone’s score is affected in different ways, even though you may be taking the exact same actions. Sound confusing? Don’t worry, it is. Here are some examples on how this can happen: