Your credit score is one of the most important measures of your financial health. It tells lenders at a glance how responsibly you use credit. The better your score, the easier you may find it to be approved for new loans or lines of credit. A higher credit score can also open the door to the lowest interest rates when you borrow.
if you’d like to improve your credit score, there are a few simple things you can do:
1. Review Your Credit Reports
To improve your credit, it helps to know what might be working in your favour (or against you). That’s where checking your credit history comes in.
Pull a copy of your credit report from each of the three major national credit bureaus. Take the time to review each report to see what’s helping or potentially hurting your score.
Factors that can contribute to a higher credit score include a history of on-time payments, low balances on your credit cards, a mix of different credit card and loan accounts, older credit accounts, and minimal inquiries for new credit. Late or missed payments, high credit card balances, collections, and judgments can be major credit score detractors.
2. Get a Handle on Bill Payments
Payment history has the most impact on your credit score. That is why, for example, it’s better to have paid-off debts, such as your old student loans, remain on your record. If you paid your debts responsibly and on time, it works in your favour.
A simple way to improve your credit score is to avoid late payments at all costs. Some tips for doing that include:
- Creating a filing system, either paper or digital, for keeping track of monthly bills
- Setting due-date alerts, so you know when a bill is coming up
- Automating bill payments from your bank account
3. Make the Most of a Thin Credit File
Having a thin credit file means you don’t have enough credit history on your report to generate a credit score. Fortunately, there are ways you can fatten up a thin credit file and earn a good credit score. Some ways include paying your rent on time, maintaining a bank account over time, paying your accounts through your bank on time and avoiding overdrafts.
4. Use Credit Monitoring to Track Your Progress
Credit monitoring services are an easy way to see how your credit score changes over time. These services, many of which are free, monitor for changes in your credit report, such as a paid-off account or a new account that you’ve opened.
Credit monitoring can also help you prevent identity theft and fraud. For example, if you get an alert that a new credit card account is being reported to your credit file that you don’t remember opening, you can contact the credit card company to report
In conclusion, improving your credit score is a good goal to have, especially if you’re planning to apply for a loan to make a major purchase, such as a new car or home. It can take several weeks, and sometimes several months, to see a noticeable impact on your score once you start taking steps to turn it around.