While many people don’t think too much about it, a person’s credit score can impact a lot of areas of their life. Whether it is about financing a new car, getting a mortgage, getting a good job, or even getting a traveler’s credit card, a good credit score can make a world of difference.
However, improving your credit score can seem like a daunting task. But, making the effort to improve your score can help you in the long term.
To help you out, here are five useful tips that can help you boost your credit score.
Understand What Your Credit Score Means
If you want to have a good credit score in the long run, you should understand how it’s calculated.
Basically, credit scores range from 300 to 850. The higher scores indicate better creditworthiness of the person. The factors that influence your credit score are payment history, credit utilization, length of credit history, types of credit, and recent credit inquiries. By knowing these factors, you can focus on areas that need improvement.
Pay Your Bills On Time
By making your payments on time, you can easily improve your credit score.
Your payment history accounts for a significant portion of your credit score. That’s why paying your bills on time is important. The easiest way to do this is by setting up automatic payments or using reminders to make sure you never miss a due date.
If any of your accounts are past due, you should pay them as soon as possible. Over time, your consistent payment behavior will positively impact your credit report.
Regularly Check Your Credit Report
Errors in your credit report can badly impact your credit score, and it is not even your fault.
That’s why, you need to regularly review your credit report to identify and dispute any inaccuracies. You can get a free copy of your credit report from any of the three major credit bureaus, which are Experian, Equifax, and TransUnion, once a year.
You can either review the information yourself or hire a credit correction attorney to go over any incorrect personal details, erroneous account information, or unauthorized inquiries. If you find any mistakes, the attorney can handle the issue on your behalf or you will have to file a dispute yourself with the respective credit bureau to have them corrected.
Use Your Credit Properly
Many people make the mistake of maxing out their credit cards or overdrawing facilities. While your lender does give you plenty of credit, you should try not to utilize over 30% of it. If you use more than 30% of your credit, it can show that your finances aren’t that great and it can lower your credit score.
To manage your credit, you should consider paying down existing balances, requesting credit limit increases, or spreading out your expenses across multiple cards. This way, you can show responsible credit usage and improve your credit score.
Build a Positive Credit History
Building a positive credit history takes a long time, and you need to take up long-term strategies for improving your credit score.
If you’re new to all this or you don’t have much of a credit history, then you can start with a secured credit card or become an authorized user on someone else’s credit card. Then, you should make small purchases and pay them off in full and on time each month.
When you show responsible behavior like this, it can slowly lead to a solid credit history and show your creditworthiness to future lenders.