How to Help Your Credit Score
Your credit score is an important part of life that impacts everything from buying a car to applying to rent an apartment. However, a lot of people are uneducated about credit scores because it’s not exactly something that was taught in school. For this reason, a lot of people have lower credit scores than they would ideally like to have and this can have huge real-life impacts. The good news is that even if you have a lower than average credit score, there are things you can do to improve your credit score and make you a more attractive loan recipient. Here are some of the best ways that you can help your credit score:
Pay Your Bills!
The first thing that you can do to help improve your credit score is to pay your bills. This one might seem a bit obvious but it’s really easier said than done! You may need to do some intense budgeting to make sure that you can pay 100% of your bills on time each and every month. Missing a payment is something that should be avoided at all costs. So if it looks like you’re not going to have enough money to cover an upcoming bill, you need to figure out a plan ASAP to make sure that doesn’t happen whether it’s applying for a short-term loan or simply asking a family member to spot you the cash until your next paycheck comes in.
Get Rid of Debt
The next thing that you can do to help improve your credit score is to try to pay off your existing debts. This is especially true if you have credit card debt, debt from unpaid medical bills, and other things like that. Bigger long-term debts that include car loans, student loans, and mortgages are less of a concern here so just make sure that you maintain your perfect payment schedule on those debts or maybe throw some extra money at your student loans or even your car payments to get those paid off faster.
Don’t Apply for Additional Credit
When you are trying to increase your credit score, don’t apply for additional credit. While you might think that more credit equals more credit history and is therefore a good thing, too many recent inquiries on your credit report will hurt your overall score. And each card or loan you apply for will warrant an inquiry that will show up on your report. However, if you are rate shopping for something big like a house or a car loan that results in multiple inquires – make sure to address that and have them grouped together so it doesn’t look like a bunch of separate inquiries when it was really for the same purpose. This will help you avoid hurting your credit score and also help you find the best rate and terms at the same time.
Use the Credit You Already Have
Instead of applying for more credit cards, focus on the credit you already have, and use that. However, don’t use too much of it. The ideal credit utilization ratio is between 10% and 30%. Anything more can potentially hurt your credit score. This is why it’s a good idea to pay off your credit card in full every month if possible. That way, you can avoid negative effects on your credit score and paying huge interest rates as well.
Don’t Close Out Any Accounts
While you shouldn’t apply for any additional credit accounts, you also shouldn’t close any of your existing ones either. Even if you don’t really use an account, it’s better to just keep it around as a part of your credit portfolio instead of getting rid of it. This is because the amount on these unused cards factors into your credit utilization rate that will inevitably go up if these accounts are closed and will hurt your credit score as a result.
Check Your Credit Report for Discrepancies
Finally, you should always check your credit report with credit report services to make sure that it’s 100% accurate. Any mistakes or discrepancies on there could be hurting your credit score for no reason! So always make sure to closely monitor your accounts and dispute any errors that you encounter.
If you have a problematic credit score – don’t freak out. You’re not alone and there are things you can do to address this. Improving your credit score won’t happen overnight and it will take some patience, diligence, and discipline. That being said, it’s totally possible if you keep at it and your life will be so much easier once you do! Having a good credit score will make it easier for you to rent an apartment, buy a car, or even buy a house. So with these long-term goals in mind, make some short-term sacrifices to pay your bills, pay off your debt, and put yourself on track for an excellent credit score.