8 Easy Ways to Improve Your Credit Score

 In Credit Repair Tips

  1. Check Your Credit Report for Errors

    One in four consumers have an error in their credit reports, and four out of five who dispute them see changes to their reports afterward, according to the Federal Trade Commission. If you identify a mistake in your credit reports, you’ll need to follow the process for disputing credit-report errors, which is one of the easiest ways to improve your credit score and doesn’t take much time.

  2. Keep Open Accounts in Good Standing

    Lenders relay account information to the major credit bureaus every month. And the more accounts, or trade lines, you have in good standing, the more positive information will find its way into your credit reports. This will either water down negative records or help expand limited credit history.

    While credit cards and loans both report to the major credit bureaus on a monthly basis, the former are far more accessible to the average consumer. Loans, of course, require repayment of whatever amount you borrow, but a credit card with no annual fee doesn’t have to cost you a thing.

  1. Get a Secured Credit Card

    If you have bad credit and are unable to get a “regular” credit card, open a secured credit card. Secured credit cards are easier to get than most other credit cards because they require a refundable security deposit, the amount of which usually acts as your spending limit. And they are treated just like any other credit card on your credit report.

    You can also increase your spending limit simply by adding to your deposit, which may improve your credit score a bit. When you close your account, you will get your deposit back, minus any outstanding balances and finance charges.

  1. Don’t Apply for Credit Too Often

    Applying for a credit card can lead to a slight dip in your credit score, especially when you apply repeatedly within a short period of time. Each application signifies that you will have less money to pay for every additional credit card or loan you get. And that’s a bad thing from a lender’s perspective. More importantly, applying in bulk tells lenders that you are desperate to borrow, which doesn’t bode well for your ability to pay.

    So if you don’t get approved for an unsecured credit card after one or two rejected applications, opt for a secured card instead. Secured credit cards are great for credit improvement because they pretty much offer guaranteed approval.

  2. Keep Your Credit Utilization Low

    Try to maintain a credit utilization ratio below 30% on each of your credit cards. And if you really want to maximize your credit score, aim for less than 10%. A higher ratio hurts your credit score, as it indicates that you are stretched thin financially.

    Credit utilization is determined by comparing the balance listed on your monthly statement against your available credit. You can improve it by spending less each month, asking for a higher spending limit or paying your bill multiple times per month to keep your statement balance as low as possible.

  3. Don’t Close Unused Accounts

    Lenders, landlords, employers and other decision makers known to perform credit checks are more likely to trust applicants with a long track record of responsible money management. Positive information in your credit reports about recently opened loans and lines of credit will help. But you have to prove yourself capable of making on-time payments and otherwise upholding your end of the borrowing bargain over time.

    So put yourself in a marathon mindset. And focus on consistency, not quick fixes.

  1. Build a Long Credit History

    A lot of available credit and a long credit history are essential for a great credit score. That’s why it’s unwise to close old accounts, even if you no longer use them. Closing accounts will reduce your available credit, raise your credit utilization ratio and give the impression that you have little credit experience.

    You should not, however, pay an annual fee to keep an unused account open. Rather, you should close accounts that are costing you money and use the savings to pay down debt or build an emergency fund.

  1. Automate Your Payments

    Some people struggle with remembering to pay their credit card bills on time. If you are one of them, call your credit card company and ask them to automatically withdraw your monthly payments from your bank account.

    Others get tempted by credit cards to overspend and incur unnecessary debt. If you are one of them, the right solution isn’t necessarily to close all of your credit cards but instead to keep some of them open yet locked in a drawer (or even cut into pieces) to avoid using them. Before you do, though, make sure your credit card company won’t close your account if you don’t use it for a long time, which would be stated in your credit card agreement.

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