So the bills are adding up and you aren’t able to keep up with the accumulating pile. You hope that they’ll all disappear but the reality is that they won’t. You wonder what kind of effect these unpaid bills are having on your credit score. Having the ability to get the top interest rates on a home/automobile purchase and insurance rates depends solely on your three-digit credit score; you begin researching how to improve your credit score so that you aren’t sunk down the road when it’s time to buy. Have bad credit score? Read these tips!
To begin improving your credit score, you must first have a glimpse at your current state of affairs. Use the free credit reports you can retrieve from AnnualCreditReport.com to dig into each of your reports and see where your failures are. Work on improving the ones that are dragging down your credit score. Unfortunately, credit scores are not free with your credit report from the major credit bureaus; however, sites like Credit Karma have an affiliation with TransUnion to provide you with a credit score at no cost.
How to improve your credit score is not as overwhelming as you think. A couple of easy tips to slowly inch your credit score up is as easy as getting a credit card if you don’t own one and keep your balance as low as you can. Owning, using and paying off a credit card can bring an improvement to your scores quickly. If you aren’t big on credit cards, then don’t use it heavily; instead aim for charging less than 30% of the card’s credit limit each month. Lower than that is even better. If you find that you’re using 75 or 80% of your cards’ credit limit, opt for using multiple cards to ease the load on just one card. Normally, the balances you have at the end of the month are what are reported to the credit bureaus and that’s what is used to calculate your score; the lower the balance, the better.
Use credit cards responsibly is one method, however, another method is adding an installment loan to your portfolio of credit. Loans such as mortgages, home equity lines, auto and student loans are all good examples of revolving credit. Paying these loans back on a regular basis and on-time shows good faith to the credit bureaus and over time this will add points to your credit score and make you less of a credit risk.
Fixing errors is another way of how to improve your credit score. It’s not uncommon to have inaccuracies on your credit report that are costing you big time when it comes to getting the credit score you deserve. Reviewing your credit report with a fine tooth comb is smart and can pay off if you find negative items that aren’t yours or ones that are older than seven years, as they should be removed or have fallen off by then. Request that from each agency.
As you learn more about how to improve your credit score, you will find out the best ways are to use a credit card regularly and maintain a small balance, include revolving credit, and be sure to clean up any mess that exists on your credit report. At that point, watching your credit score is the fun part.