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You can improve your credit score with a few quick and easy tips we learned firsthand. Having a good or excellent credit score is something that will save you money in the long run because you will be able to get lower interest rates on loans and qualify for credit cards with better rewards. Your credit score is something that you may not think about until you want to get a credit card, buy a car or house and by then it’s hard to raise your credit score in a short period of time. Instead, take the initiative now to raise your credit score with our 5 simple tips!
1. Check Your Credit Reports & Dispute Any Errors
The easiest way to raise your credit score is to check your credit reports and, if you find any discrepancies on them, file a dispute to get them resolved. Credit report errors can impact your credit score and signal to a lender that you are not creditworthy. Remember that if there is a discrepancy on more than one credit report, you need to file a dispute with each bureau that shows that error. Filing with only one will not change the reports from the other bureaus. There are several methods of disputing credit report errors, but check out our article to find out the most effective method. Learn more about how to get your free annual credit reports.
2. Make Payments On Time, Every Time
As small as it may seem, even one late payment can affect your credit score negatively. Lenders use your credit score to determine how risky a borrower you are and late payments show that you are not responsibly paying off your credit.
For installment accounts, like mortgages, car loans, personal loans and student loans, you have to make those payments on time and in full since you agreed to pay a set amount each month. For revolving credit accounts, like credit cards and retail store cards, you should set up an automatic payment each month for the minimum balance due. Then set a recurring calendar reminder to pay the remainder of your balance as soon as you can, preferably before or on the due date.
Remember the catch with credit cards is that you will pay interest if you don’t pay your balance in full each month. Your credit score will be much better if you make all of your credit payments on time and your credit score will drop if you miss payments – but we are hoping that doesn’t happen after reading this article!
3. Pay Off Credit Cards In Full
This is not always possible to do depending on your financial situation. Emergencies happen and financial circumstances occur that can prevent you from paying off your credit card balance in full each month. But, keep in mind that the more often you pay off your credit cards in full each month the less interest you will pay and the better your credit score will be.
4. Use Less Than 30% of Your Credit
Your credit utilization ratio is an important factor in determining your credit score. You should try to use less than 30% of your available credit because lenders look favorably on this and it will reflect positively on your credit score. If you know you’ll be making a big purchase you should pay off your current balance and then make the purchase. This will prevent your credit utilization from getting too high. Also if you have a good credit history, you can ask your credit card company to raise your credit limit. Keep in mind that this doesn’t mean you should spend more!
5. Don’t Close Your Old Credit Cards
It may be tempting to close your old credit cards that you don’t use anymore, especially if you have other ones that have better rewards. Resist the temptation! Closing an old credit card will hurt your credit score because it will lower your average credit history. Keep it open and even use it every once and a while so it stays active. Remember to set up automatic payments! Learn more about the factors that determine your credit score.
Bonus: Check Your Credit Scores Regularly
You can get your FICO credit score for free from Experian. It offers access to your Experian credit report and includes credit monitoring and alerts. Experian Boost also enables you to improve your credit score by adding payments that are left out of your credit history, like cell phone, utility bills and even Netflix, to your Experian credit report. The best part is that it’s free!
A simple way to check your VantageScore credit score is by going to Credit Karma and getting a free account. You can login any time and check your credit scores without impacting your credit. You can also receive emails if there is a change in your credit score, such as from opening a new account or missing a payment.
Financial freedom begins with good habits.
Rebecca & Tiago, theloadedpig.com