Are you satisfied with your credit score?
Credit scores are one of the most important components of a person’s financial wellbeing. If you have a low credit score, you may find it hard to get approved for credit cards, loans, rent properties, and even get jobs. And if you are approved for credit cards and loans, you will have much higher interest rates. Having a low credit score can make it a lot harder to get the things you need. Even with just a fair or average score, you may still feel the stresses of your credit score on your finances.
The good news is that there are ways to improve your credit score. Whether you have no, bad, average, or good credit, you should continue working to make your score better. Keeping a good credit score will take hard work and consistency over many years, but here are some simple ways to get you headed in the right direction:
- Check your credit score. Although this seems obvious, many people don’t know their credit score. You can access a free credit report from each of the 3 major credit bureaus each year on AnnualCreditReport.com. You will then know where you stand. In addition, you can check the report for any mistakes or discrepancies.
- Make your payments on time. 35% of your credit score, the largest part, is your payment history. So, it is incredibly important that you make at least the minimum payment on time each month. If possible, pay the full amount each month so you don’t have any outstanding balances. If you do have a hard time remembering your due dates, set up payment reminders or automatic transfers.
- Pay down your balances. The amount of credit you use versus the amount of credit available to you is also a factor in determining your credit score. The smaller you use, the better it is for your credit score. So, pay off your balances in full and try not to use close to your credit limit. By just using a small amount of credit each month, your score can go up.
- Diversify your credit mix. Credit cards are not the only ways to boost your credit score. Add an installment loan if you think you will be able to pay it back. Having a mixture of revolving credit (credit cards) and installment credit (personal loans, auto, mortgages, and student loans) looks good to creditors, because they know that you are financially responsible in a variety of different ways.
- Don’t overspend. This is simple, yet one of the hardest for many consumers. If you are trying to improve your credit score, the best thing you can do is make a budget for yourself and don’t exceed it. By doing this, you will be able to pay off your balance each month and won’t have to worry about getting more in debt.
- Leave old accounts open. Even though you may no longer use a credit card, do not just close the account. Cancelling your card will delete the history of that card from your credit report. And credit history plays a role in your credit score. Even if you do not have the best history with that credit card, just the fact that you have been using credit for a long time is enough to keep your credit score high. Closing that account will only ensure that your score drops.
By following these tips consistently, you can easily improve your credit score and have a better financial future!
- How To Improve Your Credit Score
- How Long Will a Late Payment Stay On My Credit Report?
- Are first credit cards important for credit history?
- What Makes Up My Credit Score?
- What is a good estimated credit score to get credit cards?
- What is the right number of credit cards to keep?
- What are some store credit cards that are easy to get?