How to Improve Your Credit Score
Your credit scores determine a lot of things in life, including how much new credit you're allowed, what kind of car the banks think you can afford, and whether or not you become a homeowner. In this day and age (and economy), having a high credit score is more important than ever. But what if your credit rating is down in the dumps? Here are a few simple ways you can quickly improve your credit score.
Remember that your credit score is always fluctuating to some degree, but implementing these habits on a regular basis will make it more steady so you have a clear idea of where you stand.
- Pay your bills on time every single month. This can cause your credit score to drop substantially because this makes up a whopping 1/3 of the credit score. This is why it's crucial to pay your bills every on time every month and keep this consistent throughout the year. If there's one action you can take regularly to improve your credit score, make it this practice.
- Use only a small percentage of your credit. Yes, your credit is there for when you need it, but that doesn't mean wracking up a huge debt amount even if you are paying it off each month. Whenever the available credit to debt ration shifts to a higher debt percentage, your credit rating sinks a little. This is why it makes a difference whether you pay cash or credit, even if you intend on paying the credit off each month.
- Dispute inaccurate information on your credit score. It's reported that at least 80% of credit reports have errors. Don't fall victim to these errors simply because you don't want to take the time to call the credit bureau and make the correction. A few points can make a difference in whether or not you're approved for that new car or a home. It's worth the effort to remove things that are inaccurate.
- Don't apply for several cards at one time. Every time you apply for a new credit card, whether you're approved or not, you deduct anywhere from 3-5 points from your credit score. This is an easy way to lose points, which is why it's best if you stick to a select couple of cards for the long haul.
- Don't close cards that you no longer use. Maybe you're trying to get away from the credit card grind altogether. That's fantastic, but don't run around closing every one of your cards. Having that available credit actually improves your score because it improves the credit to debt ration we discussed earlier.