How To Increase Your Credit Score In Just 6 Steps
Wondering how to increase your credit score? If so, you've come to the right place! Whether you want to improve your credit score because you plan on buying a home or just want to clean it up for your future this article outlines the steps you'll need to take.
With a few simple adjustments to your financial habits and lifestyle, you can start getting your credit score back on track. By doing so you'll be able to obtain favorable loan terms in the future and not worry about loan denial. Keep reading to learn more about how to raise your credit score.
1. Pay Your Bills On Time
Paying your bills on time is one of the most important factors when it comes to increasing your credit score. According to the Consumer Financial Protection Bureau, payment history makes up 35% of your overall credit score. Making sure you pay your bills on time every month can help you build a good credit history which will lead to a higher credit score. To make sure you always pay on time, it is important to create a budget and set up bill reminders.
2. Keep Credit Card Balances Low
One of the most important tips to keep in mind when attempting to improve your credit score is to keep your credit card balances low. It is recommended that you aim to keep your credit card balances at or below 30% of their limits in order to maintain a good score. Paying off any debt you have on time can also help you build a good credit history, which will in turn boost your credit score. Keeping your credit card balances low is one of the best ways to ensure that your credit score remains healthy.
3. Don't Open Too Many Accounts
Opening too many accounts in a short period of time can have a huge impact on your credit score.
While it may be tempting to open multiple accounts to take advantage of enticing offers, the resulting hard inquiries can cause your score to drop significantly.
It's best to limit yourself to one or two new accounts at a time, and wait a few months between each opening. Doing this will help you keep your credit score over time.
4. Use A Credit Card Only When Necessary
Using a credit card only when necessary is one of the most effective ways to increase your credit score. Credit cards can be a great tool to build your credit score, but overspending can lead to late payments and/or massive debt, which negatively affects your credit score. Whenever possible, pay with cash. However, if you must use a credit card, keep track of all spending and make sure to pay off the balance in full each month.
5. Leave Unused Accounts Open
Keeping accounts open that you don't use shows that you have a long history of managing credit and can help to strengthen your overall credit profile. The longer an account is open and active, the more beneficial it can be for your score. Additionally, closing accounts can actually have a negative effect on your credit score, so leaving them open is the most effective way to maximize your credit score.
6. Get Free Credit Report Access And Monitoring
With free credit report access and monitoring services, you can easily keep an eye on your credit score from all 3 reporting agencies and make sure that all of the information is accurate. By taking the time to review your credit reports, you can identify any potential issues that need to be addressed in order to improve your credit score.
By following these simple tips, you can improve your credit score and get on the path to financial success. Making sure to pay your bills on time, keeping credit card balances low, limiting yourself to one or two new accounts, using a credit card only when necessary, leaving unused accounts open, and checking in on your credit report regularly are all great ways to boost your score. With some determination and dedication, you can increase your credit score and reach your financial goals in no time, including investing in real estate and buying a home!