Foolproof Ways to Improve Your Credit Score
Your credit score can affect many of the things you want to do in life. Buying a house or car, or taking out a business loan, all require you to have a healthy credit score. Without one, you will struggle to get any organization to lend you money. When you need to make sure of your credit score, you might need to know how to improve it. If it’s poor or perhaps non-existent, you need to work on it. Luckily, you do have some control over your score, and there are plenty of things you can do. Don’t despair if your credit score isn’t perfect. Follow the advice below and you can correct it.
Get Your Credit Report
Before you start to do anything to make your credit score healthier, you should get your report. You are entitled to get one a year, free of charge, from each of the major credit bureaus. So you can get one from Experian, Equifax, and the TransUnion. If you want more, you can also pay for extras. It shouldn’t take you long to get hold of your report. Filling out a quick form should be all it takes. Go to annualcreditreport.com to get yours. If you want to think smartly, you can stagger them throughout the year. Get one every four months so that you can look at your score regularly without having to pay anything.
Challenge Any Mistakes
When you get your credit report, the first thing you should do is look for errors. Is there anything there that looks incorrect? You should be able to tell if there’s a debt you never took out, or something you have paid off that hasn’t gone away. Once you’ve identified these types of mistake, you need to make them go away. Sometimes, it’s as simple as writing to the credit company. You need to include any evidence that backs up your statement that the information is incorrect. However, sometimes you need some extra help to correct the problem. Companies like the Lexington Law firm perform services to fix these issues. They challenge any problems to try and get them removed from credit reports.
Start Building Credit
For some people, the biggest worry is that they don’t have any credit history to speak of. It might be that you’re young or that you haven’t wanted to have any kind of debt. The problem a lot of people find is that it can be hard to start building credit when you can’t prove that you can be trusted. It’s a catch-22 that a lot of people struggle with. But there are ways to start building your credit score that should be easy for most people to access. For example, you can apply for a secured credit card. They’re easier to get because you back them up with a deposit with the bank. You can also look at credit-builder loans, or get someone to cosign on a loan or credit card for you.
Keep Credit Card Balances Low
Just because you can borrow a certain amount of money, it doesn’t mean you should borrow all of it. Your credit card might allow you to spend $10,000, but it doesn’t look great on your credit report if you actually do. Many experts recommend that you keep your credit card balances at 30% or less. So you should aim not to put too much on any of your cards at once. Make sure you’re meeting your payments and try to spread out your purchases. Consider how much you’re spending each month and keep it lower, even if you are paying your balances on time.
Get Rid of Small Balances
How many credit cards do you have? Do you have a habit of putting a small payment on one card and another small amount on a different card? Some people think that they’re helping their credit score by doing this, but you could in fact be hurting it. One of the things that credit companies take into account is how many of your cards have balances. So if you have lots of cards with small balances on them, it might not look so good. It’s best to pay off these amounts and reassess your cards. Pick one or two that you can use regularly, and put away the rest. You might want to keep them for emergencies or larger purchases, but you don’t need them all the time.
Leave Paid Debts on Your Report
Some people think that once they’ve paid off a debt, they should remove it from their credit report. In fact, it looks much better if you leave it on there. An entirely paid-off debt shows that you were able to pay back what you owed. As long as you were responsible and met all your payments, it will count as good debt. Not all debt is bad to have, especially when you’ve paid it off. So leave any record of your good behavior on your credit report for creditors to see.
Draw Up a Budget to Pay Off Debts
If looking at the debts you have to pay makes you nervous, it may be time to get organized. Drawing up a plan to know how much you need to pay each month will help you meet your obligations. You’ll be at less risk of missing any payments if you make paying them a priority. Plus, you can create a calendar so that you know when you’re going to be able to pay off each debt. It can help you work toward a goal and feel more confident about being debt-free. Meeting payments in a timely manner is one of the key factors that counts toward your score. The total amount you owe is important too, so reducing your debt can help you. However, other factors aren’t as much in your control. For example, how long you have been using credit matters too.
A healthy credit score will help you make many major life decisions, including buying a home. Take charge of yours so that you can be in control of your financial future.