One Easy Way to Manage Your Credit Like a Millionaire (Even If You Live on Ramen)

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Here’s the thing about millionaires: They have way more money than you or I.

They’ve got things like assets and investments. They’ve got a nice income. And they’ve probably got great credit. That means they get the absolute sweetest deals on financial offers like mortgages, car loans and credit cards — like they really need it, those rich so-and-so’s.

What’s the secret? What do millionaires know that you don’t?

Here’s something to keep in mind: Even if you don’t have $1 million, you can manage your money like the rich. We’ve got one easy step you can take today.

Call Your Credit Card Company

If you want to live like the wealthy, you need to improve your credit score. Whatever it is now, it could be higher. (Not sure what it is now? You can get your credit score in 90 seconds for free from Credit Sesame.)

That sucker needs to shine like the hood ornament on a Ferrari. That way, you can be the one getting a good deal on a mortgage, car loan or credit card.

And here’s how you do it: Get yourself some more credit.

Call your credit card company — or companies — and ask to raise your credit limit. And then don’t spend more money. Don’t do it. Resist the temptation to use all that fine new credit you have.

What the heck? you’re asking. Is this some kind of sick game?

No, it’s just a smart way to manage your finances like the pros.

Think Like a Millionaire

Here’s something that millionaires and others with good credit know: When it comes to factors that actually affect your credit score, what matters most isn’t your total debt — it’s how much of your available credit you actually use.

This is called your “credit utilization rate.” For example, let’s say you have a credit card with a $2,000 limit on it, and you have a balance of $1,000 that you haven’t paid off. You’re using half your credit, so your credit utilization is 50%.

A ratio that’s too high warns lenders you’re overly dependent on credit, so this is one of the most important factors in your credit score. It accounts for a whopping 30% of your score.

To keep your credit score in great shape, experts recommend using less than 30% of your available credit.

You can see how your credit utilization affects your score through Credit Sesame. The free credit monitoring service breaks your credit score down into categories and grades them so you can see exactly what needs your attention.

It also offers personalized suggestions to better manage your credit.

You’ll improve your credit utilization by getting more credit, as long as you don’t spend more. So ask your credit card company for an increased spending limit. Then, think like a millionaire — and don’t use it.

You could also open another credit card for the same effect. That’s what Jerry Morgan of New Port Richey, Florida, did. He’s not a millionaire, but he raised his credit score by 120 points in six months by following Credit Sesame’s advice*.

Getting another credit card seemed counterintuitive, but he was able to transfer some of his higher balances onto a new card and level out the ratio, which helped his score.

Credit Sesame can suggest credit cards you’re most likely to qualify for, so you won’t waste your time with rejected applications.

And that’s how you roll like a millionaire.

Like Morgan, 60% of Credit Sesame members see an increase in their credit score; 50% see at least a 10-point increase, and 20% see at least a 50-point increase after 180 days. Credit Sesame does not guarantee any of these results, and some may even see a decrease in their credit score. Any score improvement is the result of many factors, including paying bills on time, keeping credit balances low, avoiding unnecessary inquiries, appropriate financial planning and developing better credit habits.

Mike Brassfield ([email protected]oarder.com) is a senior writer at The Penny Hoarder. He is not a millionaire.