7 Ways You Can Improve Your Credit Score

The use of credit is critical to the economy and allows consumers to use credit cards, buy houses, and most importantly, cars and trucks! Your credit score can have a huge impact on whether or not you can qualify for certain purchases and how much interest you have to pay when taking out a loan.

Maintaining a good credit score will come in handy if you want to save money and keep your payments low. If you want to improve your credit score, there are certain steps you can take to make it happen. Here are seven things you can do that will raise your credit score:

1. Pay your bills on time

This is the most obvious way to improve your score. Don’t miss payment due dates, and if you are late on a payment make sure that you’re never more than 30 days late. People who never miss payments have perfect credit scores. And don’t assume that things like utilities and phone bills can’t affect your credit score, because they most certainly can, especially if they’re reported as delinquent.

2. Keep your credit card balances low

If you carry credit card debt, you’ll want to keep your balances at no more than 30% of your total credit limit on that card. Credit score agencies look at something called a credit utilization ratio which shows how well you’re able to manage your debt. Those with lower credit utilization ratios usually have higher credit scores, so keep your credit card balances low.

3. Don’t close out unused credit accounts

You shouldn’t close out credit accounts even if you’re not using them. As long as you have the discipline to not use open credit accounts, you should avoid closing them out because they help establish the total credit you have available as well as longer credit history, both of which will help improve your overall credit score.

4. Check for and clear up any inconsistencies

You should check your credit report and make sure there aren’t any inconsistencies between debts that you actually owe and what shows up. Mistakes can be made and there’s nothing worse than having your credit score negatively affected by something you don’t actually owe. If you do find an incorrect debt, you should immediately dispute it and have it taken off your report.

5. Pay off any accounts in collections

Lots of people make financial mistakes when they’re younger or when they’re going through hard times. If you have had any accounts go into collections, you should pay them off whenever possible to increase your credit score. If you settle an account for less than what you owe, this will still be better for your credit score than leaving a debt, which will take seven years to disappear from your credit report.

6. Minimize the number of cards with balances

You’re better off using fewer cards with balances than having your balances spread out over multiple accounts. So if you have many cards with smaller balances, you should pay off those balances (without closing out the cards). Too much credit extended your way doesn’t boost your credit score and is likely to have the opposite effect because it’s seen as a risk factor.

7. Avoid submitting needless credit applications

Checking your credit score or applying for new credit won’t negatively affect your credit score unless you overdo it. Making too many credit inquiries indicated to credit agencies that you might be looking to take on a lot of new debt, which is considered a risk factor. Try to limit your credit inquiries to non-frivolous purchases like mortgages, student loans, and, of course, car loans.


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