7 Ways To Improve Your Credit Score
7 Ways to Improve your Credit Score
A good credit score gets you far in life. Whether you’re applying for a new job, applying for new credit, or need to start new utilities or insurance, your credit score is a factor.
You can get access to your credit score from most banks and credit card companies. Most financial institutions offer free access if you activate the program. The credit score may not be exactly what other lenders see, but you’ll get an idea of where your credit stands.
If you find out that you don’t have great credit, it’s easy to improve it with these simple steps.
1. Check your credit report often
Everyone gets free access to their credit report here. Since the pandemic, they’ve allowed free weekly access to your credit report. You may not have to check it quite that often but set regular intervals to pull your credit reports and check the information.
Each credit bureau (TransUnion, Equifax, and Experian) has a different report. Pull one at a time or all three, just make sure you can review the information for the following:
· Accuracy of all information
· Late payments you need to bring current
· Credit lines with over 30% of the credit line outstanding
· Collections or public records that need fixing
If you find errors or issues on your credit report that aren’t true, dispute them with the credit bureau. The error may be on one or all of the credit reports, so check them all thoroughly.
If the error is on more than one credit report, you must dispute it with each credit bureau. You can do this online with TransUnion, Equifax, and Experian, or write them a letter and mail it. Either way, make sure the dispute is in writing, you provide proof of why it’s incorrect, and you follow up within 30 days to see the outcome.
If the credit bureau doesn’t change it because they don’t find it incorrect, you can make a consumer statement that becomes a part of your credit report so future lenders can see the dispute.
3. Make your payments on time
Your payment history is the largest part of your credit score (35% of your credit score), so focus a lot of effort here. The credit bureaus count a late payment as any payment that’s made 30 days past the due date. A late payment can significantly decrease your credit score.
The credit bureaus count late payments in 30-day increments. For example, if you miss your due date by 30 days, your credit score falls. If you still don’t bring it current by 60 days, your credit score gets hit again. This continues as long as you don’t make the payment.
Make an effort to bring all payments current and keep making your payments on time to increase your score.
4. Keep your credit balances low
Avoid spending your entire credit line. Your credit utilization rate is the next largest part of your credit score (making up 30% of your credit score).
If you spend over 30% of your credit line, pay as much of the balance down as you can. Carrying a balance higher than 30% of your total credit line hurts your credit score. For example, if your credit line is $3,000, you shouldn’t carry a balance higher than $900, or it could hurt your credit score.
This doesn’t mean you can’t use your credit cards and charge what you need, but always make sure you can pay it off or at least get it down to 30% of your credit line.
5. Get a secured credit card
If you have bad credit or no credit, consider applying for a secured credit card. You don’t need good credit (or any credit) to get a secured card, but you must put down a security deposit.
The deposit is equal to your credit line. For example, if you put down $200, then you have a $200 credit line. If you don’t make your payments, the credit card company will keep your security deposit.
If you do, though, it will help your credit score improve. Many credit card companies automatically upgrade you to an unsecured credit card with a credit line after 6 – 12 months of good use.
6. Become an authorized user
If you have close friends or family with great credit and a credit card that reports authorized users to the credit bureaus, ask to be one.
An authorized user has access to the credit card (can use it), but it’s not required. If you are an authorized user and the credit card company reports it to the credit bureaus, you get credit for the cardholder’s proper use of the card.
This can help increase your credit score so you can get your own credit and prove your creditworthiness.
7. Sign up for Experian Boost
Experian Boost is a free program to help you increase your Experian credit score only. This program reports on-time payments for things like TV streaming, cable, cell phone, and utilities.
It links to your bank account and reports the payments you request to Experian. The average user, according to Experian, increased their credit score by 13 points with this program. That can be enough to push you from one credit tier to another, giving you more options to secure credit.
A good credit score ensures you get the best rates and terms on financing and may even help you land the perfect job.
The key is to spend your credit wisely, make your payments on time, limit your applications for new credit, and dispute any issues you find on your credit report. Take advantage of the free credit reporting and check your credit often. If you find issues, dispute them, and if you make mistakes yourself, fix your habits so you can have the best credit score possible moving forward.