Tips To Improve A Bad Credit Score

A credit score is a number, based on a person’s credit history, that determines their creditworthiness. Banks and other lenders use this number to evaluate how likely it is the person will pay back a loan on time. Having a bad credit score makes it difficult to get a car loan, carry a mortgage, and in some industries, get a good job! Credit checks are incredibly common and the number they issue can open many doors.

The encouraging news is a bad score doesn’t have to remain that way! It is possible to fix your credit score. When you get your credit report and need to improve the credit score it shows, get ready for some hard work! Many places will offer specialized credit score help, and there are also simple tips that make up the best way to fix bad credit. Get the details now!

Conduct Credit Report Checks And Regular Monitoring

Okay, first things first: check your credit report. Everyone can check their credit score and get a report once a year free of charge from a major credit bureau. Doing this every 3 to 4 months from a new bureau each time allows people to see potential mistakes and get them corrected faster. If you do find mistakes on your credit report and get them fixed, your credit score will rise quite a bit within 30 days. It may even be less if you’re fast enough! This will require filing documents with the credit bureau. Even after improving your credit score, it’s still important to regularly monitor it so you can keep track and know if future mistakes are made and correct potential issues before they reduce your score again.

Set Up Automatic Bill Payments

Paying your bills on time and in full is a great way to improve your credit score. This is incredibly easy to do when you set up automatic bill payments. Authorizing automatic payments from the hydro company, car insurance provider, cell phone provider, and similar places ensures you won’t mistakenly miss a payment or make a late payment. Many mortgage providers also permit clients to set up automatic payments! These payments authorize transactions directly from your bank account every month. Nothing gets lost in the mail and everything is on time! Do this for as many payments as possible and watch your credit score rise quite a bit!

Maintain A Variety Of Credit

Although many believe having little credit is a good idea, this is not the case. A variety of credit helps show someone is a responsible borrower. It helps boost your credit score very well as long as the variety is well-managed. A variety of credit doesn’t mean you should go out to buy a car or a home if these things weren’t in your original plan. It does mean doing something like taking out a personal loan and paying it off fast does help! More than a credit card is important!

Paying off a loan before interest is important for trying this method of boosting your credit score. Of course, it’s important to remember applying for many credit accounts at the same time isn’t smart. Doing this in a short period sets off red flags and can reduce your credit score.

Keep The Same Account Open

Keeping the same accounts for a long time helps boost your credit score. This is because one of the major components of your credit score is the length of time you’ve had open accounts. Take a credit card for instance. Everyone will have a first credit card, even if it’s one with a low credit limit. Keeping this card active, even if you’re not using it anymore, still helps build your credit. Closing accounts like this will remove the credit history it built for you. In addition to this, it lessens your available credit limit, which will boost your debt utilization. This means it makes the debt you do have seem larger! Thus, keep cards and accounts open as long as possible.

Increase Credit Limit When Offered

Speaking of credit limits, increasing your credit limit can have an amazingly positive impact on your credit score. This is because the higher your limit is, the lower your utilization score is going to be. You don’t have to use all of the credit available to you! This is an important distinction, because many people get tempted to use more credit if it’s available. For a credit limit increase to benefit your credit score, you need to keep your habits and budget the same. Don’t increase spending just because you can!

Consider this: using $5000 of a total credit limit of $10,000 is half of what’s available. It’s best to pay everything off, but if this isn’t possible, keeping the credit utilization ratio below 30 percent is key. This means carrying a balance that equals half compromises your credit score quite a bit. However, increasing your credit limit to $15,000 while still carrying the $5000 balance reduces your ratio to 30 percent. This looks much better!