5 Tips to Improve Your Credit
If you hope to buy a car or house, get a credit card with better terms, or take out a loan, you need to be thinking of your credit score. People often suffer from bad credit due to late bills, overdrawn accounts, or fees that they were unaware of. What they don’t realize is that you can raise your credit in a variety of ways. Here are five tips to improve your credit score:
1. Check your credit report and make sure there are no mistakes
You can request a free credit report from several different agencies online. Look through it to see what is damaging your score and make sure that none of the entries are incorrect. You will need to take note of them if you hope to contest them and have them removed from your record. If you’re lucky, that will be enough to get your score to a level you’re happier with.
2. Reduce the amount of debt you owe
Obviously, that’s easier said than done. But if you want to get a better credit score, it’s important to pay off credit card and other forms of debt. Start with the accounts that charge the highest interest, but try to work them all down as low as you can. Changing habits on this topic requires a lot of self-control and often some serious lifestyle changes as you adapt to a large portion of your disposable income going towards servicing your debts.
3. Set up automatic payments or payment reminders
One of the largest contributors to bad credit is paying your bills late. Be sure to never make this mistake by keeping close track of when your bills are due, or having them paid automatically. If you choose auto-payments, be sure to avoid overdrafting your debit account if it gets too low. If you miss a payment by a small amount of time, call your bank’s customer service line immediately: they may choose to be lenient if you are generally good about paying in a timely fashion.
4. Don’t open too many credit accounts
While it does improve your score to have a diverse portfolio of accounts under your name, many people make the mistake of applying for too many credit cards. This not only encourages bad behavior by letting them rack up debt in many places at once, or use one account to pay off the debt on another one, but also shows up in your records and signals a likelihood for delinquency to credit agencies.
5. Keep trying
The longer your credit history, the better it is likely to be (assuming you have good habits). People that are just getting their first card generally have lower scores than those that have responsibly using credit cards for several years. The key is to maintain responsible habits by never charging too much on your card (always try to keep it under 30% of the limit or lower, if you can), always paying bills on time, and disputing any incorrect negatives on your report.
If at all possible, avoid the mistake of damaging your credit in the first place. Rebuilding your score can be a slow and painful process. If you find yourself in need though, hopefully these tips can help.