I am always reading tips from experts on the internet about “great ways” to improve your credit score fast. In my search I have come across all kinds of crazy ideas, most of them are ones that you have to read twice, and then are still left saying to yourself “did I actually read that correctly”? The sad part in most situations is, yes, you did read it correctly. It just happens to be absurd advice and it frightens me to think that people might not only be reading this advice but worse following it! The bad thing about this is that anyone that wants to write an article can claim they are an expert and put it out there for the world to read. Rather than showing you examples of these crazy articles and why they give bad advice I have decided to take three of the most common “tips” that I have come across in my recent search and explain to you why the advice is not only wrong, but in one case following the advice will actually hurt your credit score! Here are the top 3 tips I found given from other “experts” in the field on how to improve your credit score fast.
1. Opt-out of preapproved credit card offers- This is one of those credit myths that just won’t die. Someone years ago started this by claiming they had inside information by a source that couldn’t be named (first clue it was someone sitting in their basement thinking they could outsmart the system) that if you went to a website and put yourself on a list that opted you out of any preapproved credit card offers that it would immediately improve your FICO score by 20 points. The theory further states that the reason that your score would improve is because it shows lenders that you are using restraint and not over using credit as well as the inquiries from the credit card companies would no longer be dinging your credit score.
I first heard this groundbreaking insight about 8 or 9 years ago, so this isn’t anything new but it keeps resurfacing. Here are a few red flags for you…
- If anyone claiming to be an expert EVER tells you to do something to improve your FICO score and also states by following that advice your score will improve by a certain point value (20 points as stated with this one) throw the article away, turn off the TV or get up and leave. This is a huge red flag that the “expert” is no more of an expert than the person sitting next to you on your next airplane flight. A real expert will tell you that when it comes to this type of stuff there is no exact point value, it depends on your current file and what score card you are on. We won’t get into that now because it is boring and most of you reading this won’t care anyways. Just remember if you hear, read or see something like this do yourself and your FICO score a favor and stop listening.
- Preapproved credit card offers are soft inquiries, meaning they do not hurt your FICO score. I would love for anyone spreading this rumor to explain how having less of an inquiry that doesn’t hurt your score in the first place will somehow magically improve your score.
- Your FICO score only evaluates the information on your credit reports. It is not going to cross reference your credit report with some website to see if you have “opted-out”.
If you want to opt out of preapproved credit card offers because you are worried about identity theft or you just don’t like to get the mail that is one thing. If you are opting out to improve your FICO score save yourself the trouble.
2. Don’t get denied credit-I can’t believe people actually write articles about this, but several have. The theory according to them is that every time you apply for something and get declined the denial or decline hurts your credit score.
- Do we really need to tell people to try NOT to get declined? Nobody wants to get declined but it happens. But, advising people to not get declined just makes me laugh.
- If you apply for something, the lender will pull your credit report. This is classified as a hard inquiry because you have applied for new or additional credit. Hard inquires can hurt your score. But, nowhere on a credit report will it say you were declined or denied. The inquiry is what can affect your credit score, not the act of being denied! Making a statement that being denied credit will hurt your score is absolutely a 100% false statement.
3. Open a credit card and max it out- I call this theory the max it out and repeat process. The people behind this one would like you to believe in order to get a better credit score you need to open a credit card, max it out, carry the balance for a few months, pay it off and then repeat the process.
- There is a much better approach to this, one that will actually help your score and save you money. Have you ever heard someone reference K.I.S.S. “Keep It Simple (S)”? If you have never heard that before look it up and discover for yourself what the meaning of the last “S” is. I don’t want anyone thinking I am calling them stupid! Credit card balance to limit is a very important part of your score. The best place to be is to have a balance of less than 10% of the limit as a general rule of thumb. Following the “max it out repeat” theory is hurting your score, not helping!
- Credit scores only evaluate you based on the information that is appearing on your credit report at that moment in time. It is not looking back over the history of your account balance on your credit card and somehow giving your score extra credit because you were able to max out your credit card and then pay it off! The score doesn’t care about that and neither should you. Don’t get into debt to try to improve your credit score. If I was a conspiracy theorist I would say that credit card companies started this theory. Think about it…get a credit card, max it out and pay outrageous interest charges for a few months, then pay it off right before repeating the cycle all over again all in the name of improving your credit score…hmm.
My advice is to stay away from these three popular “tips”, along with 90% of the other credit advice you read, hear or see. Be careful to whom you listen to when it comes to your credit score.