Your credit score is an important part of everyday life because it is used to determine your eligibility for a loan in addition to mapping out your credit history. The problem, however, lies with the misconception that checking this all-important report is a time-consuming and hopeless undertaking. Well, contrary to that, popular credit checking tools like Experian and MyCreditMonitor are always at hand to make this process as painless as possible.
You only need to sign-up with them and log-in to access a 3-digit numerical value that summarizes your creditworthiness. A score of below 620 is generally considered as “Poor” while anything above 720 is ranked as “Excellent”. Irrespective of which number you get, the most important thing is to understand what you can do in order to keep improving. That is why we found it important to talk about some practical ways to improve your credit score.
1. Don’t Apply for Credit Accounts Needlessly
One mistake most people make when they are under the pressure of improving their credit score is applying for several credit accounts. They think that opening more new accounts gives them a better credit mix which can help them improve their credit score. However, it is recommended to apply for credit cards that you only need. This way, it will be easier to manage them especially when it comes repaying debts on time.
2. Make Timely Payments
Sounds obvious, right? Well, it is. One of the biggest ingredients in a good credit score is making timely payments as it shows you are a sensible borrower. So if you fail to pay your bills on time, your credit score will definitely be affected negatively. But just in case you have difficulties paying on time, the best solution is to contact your lender and explain your situation hopefully it will try to help. The lender could extend your repayment period.
3. Keep Balances Low on Credit Cards
A major factor in your credit score is actually how much revolving credit balance you have on your credit card versus how much you are spending. It is recommended that your credit balance should be as low as possible to boost your score. This is because high outstanding debts can hurt one’s credit score badly.
4. Apply for Credit Builder Credit Cards
Your credit score is usually all about trying to predict your future behavior based on the credit history you have had in the past. Those with little or poor credit history, therefore, do poorly. Fortunately, if you don’t have a good credit score, then you can always apply for credit builder credit cards. These cards, however, charge much higher interest rates compared to standard credit cards and credit limits are also low.
5. Increase Your Credit Limit
If you are having problems managing lots of credit cards, the best way to solve this is to extend your credit limit. Simply go with the card that you have had a long and clean history and ask the credit card issuer to increase the limit. This will help you reduce the amount of credit you are using as compared to how much you could actually use. It is much better solution than applying for many credit cards.
6. Automate Payments
Sometimes you can miss making payments on time may be because the payment fell behind the desk or it simply got lost in the mail. But just that one late payment can destroy your credit score faster than you think. So what better way to make sure you don’t forget to make payments on time than automating all your payments and creating a calendar reminder for your credit card bills? By automating your payments, you will never have to worry about what bills and when to pay them.
7. Check your Credit Report for Errors
Sometimes you could be a victim of fraud or your credit report may have some errors. For this reason, it is important to check your credit report for any errors. You have a legal right to request a copy of your credit report at a small fee. But you can also check your credit report online for free with some companies that offer free trials. If there are any errors, your credit score will improve once the errors have been wiped from your report.
Though there is no quick fix for poor credit scores, these 7 ways to improve your credit score should help you irrespective of how bad or low your credit score is. They key thing is to be patient and with time you could be raising your glass to a much better score.