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3 Easy and Free Ways To Increase Your Credit Score For Life

Credit Score Increase

3 Easy and Free Ways To Increase Your Credit Score For Life

You probably didn’t think there were ways to Free Ways To Increase Credit Score without paying a dime.

Well, believe it or not: it totally is.

These are three tips that anyone can take advantage up to get a boost in their credit score. However, a couple things to note:

  1. These boosts aren’t immediate. In fact, since some of them require opening new accounts, you may see that your credit score drops in the very short run. The greater benefit that they provide happens over time.
  2. They’re free and relatively easy, but they could cost you in the long run if you are not disciplined.

Do not take this advice as financial planning advice. We don’t recommend to use these methods as supplemental cash; in fact, these are better used when you don’t use them! These ways to increase your credit score rely on getting you additional credit. This is the easiest way to do so.

Tip #1: Get Overdraft Protection

More free ways to increase credit score – Most banks offer overdraft protection for free. If your bank doesn’t, then you really don’t need to take advantage of this.

However, keep in mind that overdraft protection is not exactly ‘protection’. If you overdraw your account, the bank charges a fee plus interest on the amount overdrawn. Without overdraft protection, a check or other withdrawal attempt would simply bounce and you’d have to pay a payment failure fee and no interest.

Ways to Increase Your Credit Score: Overdraft Protection

If you never actually overdraw your account, then you would technically have access to credit: without paying any fees or taking any penalties!

Your credit score consists up of five factors: payment history, amount owed, credit mix, length of credit history, and amount of new credit. Amounts owed makes up 30% of your credit score, and is based on the amount of debt you have vs. the amount of credit you have access to.

Therefore, having greater access to credit in all forms, assuming you keep your debt constant, will improve your credit score.

Compare that to new credit, which makes up 10% of your score and relies on how much of your credit account is new.

New credit is impacted negatively, whereas amounts owed and credit mix become impacted positively.

Tip #2: Open a Home Equity Line of Credit

Another awesome free way to increase credit score…If you own a home, you have an asset that allows you to take out debt against it. The more equity you have in your home, the more you can take out with a home equity line of credit (HELOC).

This, as well, takes advantage of having access to extra credit. However, HELOCs are often excellent sources of last resort emergency funding because of their low interest rates and how difficult it can be to withdraw from it.

If you don’t own a home, you won’t be able to do this. However, there are other ways to open a line of credit without a home! Your bank may offer you access to lines of credit depending on what assets you own and how good your credit is. Talk to your banker about opening a line of credit.

Tip #3: Open a Secured Credit Card (requires cash, but costs nothing!)

Secured credit cards are often recommended for young people or people who just recently had a bankruptcy as a way to build credit. They are often one of the best ways to increase your credit score.

Some banks will offer a secured credit card with as little as $200 collateral, but won’t charge any fees to use the account.

Ways to Increase Your Credit Score: Secured Credit Card

The larger the secured credit card, the more money you will have access to. This, as well, helps amounts owed.

Please remember, with these free ways to increase credit score, it’s up to you to be responsible with the additional credit that you have access to. If you are irresponsible with it, your credit score WILL go down.

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