Tips on How to Improve Your Credit Score

Having a good credit score is important because it will grant you access to receiving better rates on loans.  Your credit score shows how well you manage your credit and how reliable you are at paying back loans.  Loans are a necessary part of life for most of us, whether that is needing college loans, car loans, or even mortgages. Read the list below for tips on how to improve your score.

 

  1. Pay bills on time
  • When your credit score is being reviewed one of the main aspects that is looked at is how reliable you are when it comes to paying your bills on time. Paying on time positively affects your credit score while late payments hurt your credit score. Something that can help you is setting up payment reminders, so you don’t forget.

 

  1. Fix your credit utilization ratio
  • Your credit utilization ratio is how much you currently owe on your credit card divided by your credit limit. The credit utilization ratio is one of the biggest categories that influences your score. The higher the ratio the more your score will suffer. Pay off any debt and pay down your credit cards that have high balances.

 

  1. Apply for credit cards sparingly
  • Every time you apply for a new line of credit a hard inquiry is pulled on your report. A hard inquiry lowers your score temporarily. Avoid applying for multiple credit accounts in a short time frame because that will raise the amount of hard inquiries pulled. When you are searching for mortgage, car, or other personal loans, make your rate comparisons in a short time frame to keep your hard inquiries to a minimum.

 

  1. Monitor your credit/ dispute any errors
  • It is always important to monitor your credit. Monitoring your score every couple months will help you gage whether you are doing a good job of managing your credit or not. You should always verify that all charges on your accounts are accurate to avoid identity theft. If you see any errors dispute the information right away.

 

  1. Do not close unused credit card accounts
  • The age of your credit history matters, and a longer history is better. So even if you don’t use a credit card account anymore don’t close it, as long as it doesn’t cost you money in annual fees. Closing an account can increase your credit utilization ratio.

 

  1. Take advantage of score boosting programs.
  • The average age and amount of accounts you have are both big factors that affect your credit score. If you have a short credit history, you can use programs such as Experian boost to help you out. These programs will allow utility, cell phone payments, and banking data such as your checking and savings account, to be considered along with your credit report when determining your score.