5 ways to improve your credit score
A good credit score will take you a long way. You’ll always pay the lowest interest rates on your loans, which means you can keep more money in your pocket. If you’re someone who’s looking to improve their score, here are 5 ways.
But first…what makes up your credit score?
Your credit score is made up of 5 major factors: Payment history, credit usage, age of credit accounts, credit mix, & new credit inquires.
Ways to IMPROVE your credit:
1. Pay your bills on time
Lenders like to know you’re reliable on paying your bills on time. Set up automatic payments so you never forget.
2. Pay off debt & keep balances low on credit cards
Always pay attention to your credit utilization ratio. Lenders like to see low ratios of less than 30 percent. This means if you have a monthly credit limit of $5,000, you’re only using $1,500 of that credit line.
3. Don’t close unused credit cards
Closing accounts can increase your credit utilization ratio. Keep them open as long as there are no fees associated with that card.
4. Don’t apply for too much new credit
Opening a new credit card does help increase your credit limit. But doing it too frequently can trigger a ‘hard inquiry’ into your credit score. If your credit score has too many inquiries, that can have a negative effect on your credit score.
5. Dispute any inaccurate credit information
Use credit reporting resources such as TransUnion, Equifax, & Experian to check for any incorrect information.
How long does it take to rebuild a credit score?
When it comes to building credit, it’s all about the long game. There are no quick fixes, but constantly monitoring your credit utilization score and other methods mentioned above will help you reach your goals faster than you think.
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