How to hide your credit utilization; I guess you know our credit scores affect many different factors in our lives, from new credit card approvals to mortgages to job applications. And an important part of our creditworthiness is our credit utilization rate. The more of our total credit we use, the less financially responsible we seem to potential lenders.
If you’re concerned about your credit load, you may want to find quick and easy ways to reduce or how to hide your credit utilization taxes from your credit reports. We give a quick overview of what credit usage is and five easy hacks on how to hide your credit utilization and improve it.
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The central propositions
Your credit usage accounts for a significant portion of your credit score, which is why it’s critical to keep your usage low.
There are a few hacks you can use to quickly improve your credit usage, including paying with your cards more often, reducing spending, requesting a credit limit increase, etc.
Overview
Before we get into the details on how to hide your credit utilization, let’s start by saying there’s no way to “hide” your credit card usage in your credit reports. However, there are ways to reduce your usage, which will help improve your credit score.
Credit Utilization Explained
Your credit card usage rate is the ratio of your debt to your credit limit. In other words, it’s the percentage of your credit limit you’re currently using. As a rule of thumb, you should always use 30% or less of your credit limit, although some financial experts recommend no more than 10%.
From a lender’s perspective, high occupancy is a red flag as it indicates that you may be struggling to pay your bills on time. On the other hand, a low occupancy rate shows that you are a responsible borrower and generally better for your credit score.
To calculate your credit utilization ratio, combine your balances from all your credit cards and divide that amount by your combined credit limits. Let’s say you have two credit cards, one with a $2,000 credit line and one with a $3,000 credit line. You have a balance of $500 on the first card and $1,000 on the second card, so your total balance is $1,500.
- Credit card 1 = 25% usage
- Credit card 2 = 33% usage
- Total = 30% usage
How To Hide Your Credit Utilization
How To Hide Your Credit Utilization? Here are five ways you can improve your overall credit usage and therefore your credit score. Good credit utilization is a powerful tool to build up your credit in a short time. It can take months or years to recover from bankruptcy or default, but your credit score can improve significantly if you can pay off all your debts quickly. While you can’t hide your credit usage, here are five ways you can improve your overall credit usage and therefore your credit score.
1. Pay your credit card balance regularly
Never use your credit cards as a long-term loan. It’s a surefire way to build up a mountain of debt and drag your credit score down in no time. The only exception is if you use a 0% APR credit card for high spending or to pay off existing debt during the 24-36 month promotional period.
Subject to this exception, you must always pay on time at the end of each billing cycle. One tricky thing is that the balance that your credit card issuers report to the three major credit bureaus — Equifax, Experian, and TransUnion can differ from your monthly spending.
Typically, your credit card issuers report the balances at the end of your billing cycles or your bank statements, but this isn’t always the case. Sometimes issuers send the information to the credit bureaus at the same time for all their cardholders, regardless of when their billing cycles end. This means that your publishers can report your credits before you refund them. These are the amounts your credit report uses to calculate your occupancy rate.
If you’re not sure when your credit card company will report your balance, it’s best to contact customer service and ask. Knowing when your data is reported can help you tremendously in keeping your usage down and potentially abusing the system.
For example, if you know that your lenders will report your information on the day your billing cycle ends, you can try to cash out your balance before the payment and statement date. You can make smaller and more frequent payments to reduce your paper load. However, how often you pay off your debt will depend on your balance and available cash.
Alternatively, you can set a limit yourself and withdraw your money when that limit is reached. While studying abroad in college, I only had one credit card to use with no international fees. Since it had a $2,000 credit limit, every time I spent a few hundred dollars on the card, I had to pay back my debt to make sure my credit utilization rate stayed low. So I would make multiple payments per month to keep my credit card balance below 30-50% during the months I was traveling.
2. Increase your credit limit
Raising your credit limit can significantly improve your credit card usage. A higher total credit limit means that you have more credit available. So your expenses as a percentage of your total credit will be lower.
Please note that this is not a request to change your spending habits, as it effectively negates the benefits of increasing your total available credit. If you have poor credit management or a tendency to overspend, increasing your credit limit may not be the best idea.
There are two ways you can do this:
- Apply for a new credit card
When you open a new credit card account, your total available balance increases, increasing your credit limit. But there are a few caveats to keep in mind. When you apply for a new card, lenders will make a hard request on your credit, which usually lowers your score slightly. Plus, it can lower the average age of your credit card accounts, which is another factor in your credit score (although credit usage outweighs).
In most cases, you won’t know your credit limit on the card until you’ve been approved. Factors that can affect your credit limit include your income and creditworthiness.
- Ask your credit card company to increase your credit limit
Your other option is to go to a credit card company where you have an existing account and ask them to increase your credit limit. If you’ve consistently paid your bills on time or increased your income since you got the card, your card issuer may be willing to increase your credit limit. You can make this request online or call customer service. To qualify for the boost, you may need to meet certain criteria, such as B. An account that has been open for at least 6 months.
3. Reduce your expenses
If you’ve been working hard to pay your credit card bills but struggling to keep a low balance, it may be time to cut back on your spending or stop using your cards altogether. Otherwise, your new purchases will only be deducted from your payments.
There are several ways to try this:
You can make a budget and map out your needs and wishes. I currently use a variant of zero-based and value proposition budgeting to consciously spend more and buy only what I need.
You can switch to a debit card or cash for your daily purchases. This way you can spend only the amount you have in your accounts or on hand and that’s it.
You can automate your savings and investments. For example, I automatically invest 10% of my paychecks in my 401(k) and put money into my savings and investments right after I get paid. This ensures that I pay myself first and prevent myself from overspending.
Eventually, your credit utilization should improve as you lower your spending because you’re spending less of your available credit.
4. Keep your accounts open
As you begin to get your finances in order, you may be tempted to close credit cards that you no longer use. While this step can help you better manage your credit cards, it will also decrease your available balance and the average age of your accounts, which in turn will affect your credit score.
When researching new credit cards to apply for, I wanted to close some of my existing cards because I felt the benefits weren’t as great. However, I decided against it because it would have a negative impact on my credit rating. Instead, I use them just enough to keep the accounts active.
Depending on the credit scoring models used, closing an account can have a major impact on your credit score, especially if it’s one of your oldest accounts. If you’re having trouble balancing multiple credit cards, try using some of your less active cards for smaller purchases every once in a while. For one of the cards I use less often, I load my Spotify subscription into this account and use it throughout the month for various smaller purchases.
5. Erase your debt strategically
If you’re having a hard time paying off your credit card balances, consider being more strategic with your payments. You should keep your card usage and overall credit limit low. If you have certain cards with much higher fill rates than others, cash out those cards first.
The key is to first remove the balances on the highest usage cards before reporting your details to the bureaus. For example, if you have a card with a 25% usage rate and one with a 50% usage rate, focus on the latter. You can improve your utilization to the desired 30% or less by reducing the second balance.
Conclusion – How To Hide Your Credit Utilization
Focusing on your credit utilization is the easiest and quickest way to improve your score. While you can’t hide your credit card usage from your credit reports, there are certain steps you can take to improve it.
Keep in mind that while the tips and tricks we’ve shared can help you lower your utilization rates and boost your credit score, ultimately you need to create a plan to get on top of your debt and get it better managed in the future. Building great credit takes time and requires regular maintenance.