Three Ways to Improve Your Credit Score
October 28, 2021
Did you know that making simple changes can improve your credit score? With a higher score you may receive more favorable loan rates, so it pays off to improve it. Here are three ways to get started.
Your credit score is used by lenders to predict how likely you are to pay back a loan on time. Usually consumers with higher scores have an easier time qualifying for a loan and will most likely be offered lower interest rates. Most credit scores range from 300 to 850. Here are three ways to improve your credit score.
1. Keep credit card balances low
When you use less than 30% of your credit limit on any credit card, it reflects more positively on your credit score. You can achieve this by keeping your balances low or paying them off each month.
Because credit utilization is the second-biggest factor in determining your credit score, making it a priority to keep your credit balances low will help improve your score.
2. Pay bills on time
Paying your bills on time has the biggest impact on your credit score. Even one late payment can adversely affect your score.
If you are having trouble keeping up with your bills, contact each creditor immediately. Work with them to set up payment plans, and bring your accounts up-to-date as soon as you can. Setting up automatic payments through your financial institution can also help you stay up-to-date on bill payments and avoid late fees.
3. Identify credit report errors
Reporting a mistake on your credit report can also help improve your score. Your credit report is a statement about your credit activity and your current credit situation, including loan payment history and the status of your credit accounts.
To get a free copy of your credit report from each of the three major credit reporting bureaus – Equifax, Experian, and TransUnion – visit AnnualCreditReport.com. It is recommended that you check your report three times a year (once every four months). Report any errors you see to the credit bureau.
Having a higher credit score will pay off as lenders use these scores to make decisions about whether to offer you a mortgage, credit card, auto loan, or other credit products. Your score is also used to determine the interest rate you receive on a loan or credit card, and the credit limit. Taking these steps, you can begin to improve your score and have the advantage of more favorable loan rates.
Tags: Borrowing Money, Credit Cards, Money Management