Are you looking to purchase a new vehicle, apply for a bridging loan, start a business, or getting ready to move into a new home? Then it’s time to begin taking steps to improve your credit score. A higher credit score increases your chances of approval for all manner of loans, allowing you to apply for loans and other lines of credit with financial confidence. To find out eight ways you can improve your credit score, continue reading below.
8 Ways to Improve Your Credit Score
1. Review Your Credit Reports For Inaccuracies
In a study conducted by the FTC, 26% of participants were found to have a potentially material error in their credit reports. You can ensure that your credit score is accurate by looking into the accounts and negative marks listed on your credit report and reporting any you don’t recognize.
2. Make Regular Payments
Making consistent payments on time is the most integral piece to any strategy for rebuilding credit. A late payment can stay on your credit report for 7 1/2 years, making it the highest contributing factor for affecting your credit score,
3. Set Up Automatic Payments
When paying off various debts at once, the most considerable difficulty most people face is simply remembering when each payment is due. One way to circumvent this issue is to set up automatic payments or payment reminders with your creditor or bank.
4. Limit Your Credit Utilization to 30% or Less
Your credit utilization reflects how much outstanding debt you have in relation to your available credit. The most common recommendation given is to keep your credit utilization under 30%. However, to achieve the highest credit score possible, a utilization of 10% or less is required.
5. Make Extra Payments
Once you’ve gotten into the habit of making your payments on time, you can make extra payments between payment dates to give your credit score a slight boost.
6. Pay Attention To Past-Due Bills & Accounts
One of the best ways to improve your credit score is to pay off any ‘maxed out’ credit cards, as it lowers your credit utilization rate. Keep in mind, though, that making payments on a debt that the creditor has ‘charged off’ can lower your credit score by reactivating the debt.
7. Consolidate Your Debt
If you’re currently struggling to pay off multiple bills at once, then you may want to consider consolidating your debt. Debt consolidation allows you to combine past-due and current debts into one, easy-to-make payment.
8. Limit Hard Inquiries
Although opening a new account can increase your total credit limit, opening several accounts in a short amount of time can do more harm than good for your credit score. When banks see too many hard inquiries over a short period, they associate it with financial difficulties and high risk.
The Bottom Line…
Remember, attaining and maintaining a high credit score takes time. There is no quick fix to raise your credit score instantaneously. However, you can improve your credit and reach your credit and financial goals with due diligence and informed vigilance.