5 Ways to improve your Credit Score

Whether you are in debt, trying to apply for credit to purchase an item or just see how your credit rating is, it is a good habit to check your credit history often at least once a year.  Your credit history determines how you look upon the eyes of creditors and lenders as well as your reliability in paying them.  The higher your credit score, the better trust you will gain towards creditors and lenders.  Also, the amount of interest on a particular loan that you can receive will be lower.

In our case and in the 21st century, the average household is in high debt; interest rates are going up; there are increasing delinquency rates and society is just getting by through their financial situations.  All this impacts ones credit rating meaning that it takes a hit and becomes low in the eyes of creditors.

The most important focus now is how we can get back on track and improve our credit rating.  Below are 5 ways to improve your Credit Score:

1. Check your credit file

As I have mentioned previous, it is best practice to check your credit score and report to see where you stand in terms of your history of credit card usage, lines of credit, mortgages, auto loans and other sources.  Ensure that the report is accurate and that there are no mistakes such as loans that you have paid but still show in your credit report as this affects your rating.  You want to ensure that what shows in your report reflects what you currently have with regards to your credit balances.  Credit bureaus where you can check your credit history are Equifax, TransUnion and FICO.  Know that it is your right that you can ask for a credit report free of charge once a year as you will see that the Credit bureaus ask you to pay but this is if you want to check more than once a year.

2. Do not miss or make late payments

Always keep track of your credit card and or loan payments as they will affect and lower your credit score.  Some ways to prevent late payments is to set alerts either in your smart phones, smart watches, writing them down on your agenda or calendar, post it notes or even hanging it on the fridge.

3. Pay off your debts

It would be great if all debts can be payed off but ther reality of the situation is that there are difficulties based on the size.  Regardless, when paying off debt in portions, lump sums or even all of it if possible will make a significant impact on your credit rating; thus, raising your score.  Cutting unneeded expenses and putting it towards debt payments will also help.  If you can pay more than the minimum payment on a credit card will also help increasing your credit rating as that will be seen to the Credit Bureaus that you are doing your best to tackle down and eliminate the debt.

4. Space out credit applications

When applying for credit cards, lines of credit, purchasing a new vehicle or appliance for the home, the company will want to check your credit history to determine your
approval and credit worthiness.  When the result comes in where you are denied the application, this will affect your credit rating according to the Credit Bureaus and will be in your credit history.  The problem that occurs is when one applies again for other credits in a short period of time.  This will result in the credit score to keep dropping and then taking a while for it to recover.  Pay attention to when you apply and if you find out that you have been denied the credit application then it is best to wait at least 6 months before applying again or applying to another credit source.

5. Under-use your credit cards

The best practice when it comes to credit cards is to use it when absolutely necessary.  If the purchase is too big of a price tag that it will take time to pay it off, consider waiting as products tend to go down, there may be specials or discounts, year end inventory sales.  The point is to under-use your credit cards as you do want to improve your credit but only pay for items that you can pay off quickly.  You will be surprised how credit card balances increase if not paying close attention.  Use any source of credit wisely and try to keep it below 50% of the credit limit.  If possible, try to use more of your debit card or cash when purchasing items.

Credit scores are a way to determine your credit worthiness and trust from creditors when they lending out a loan.  Keeping a good credit rating is key to receiving benefits such as low interest when applying for a loan.  For those that paying off their debt, coming out of bankruptcy or have been denied loan applications, it is important to focus on rebuilding their credit.  The ways mentioned in this article are some of the examples to improve your credit score and keeping to these practices will lead to a clean record.  Please let me know if you have implemented any of the ways and if it has made a difference in your financial lifestyle.

2 thoughts on “5 Ways to improve your Credit Score”

  1. Your credit score is definitely an important part of having a great financial outlook. Improving your credit score and maintaining a high score will help you down the road as you apply for different loans in life, especially a mortgage. I’ve known people with very low credit scores that are unfortunately burdened with an interest rate that is 3 times the rate other people with high scores are paying. It’s crazy how much a credit score matters!

    I have done all the things you recommend, and fortunately I have a high score. I would also say that people should not close their accounts because that can have a detrimental impact on your score. The longer you have a credit history, the better your score will be as well. It can be done, it just takes time and diligence.

    Thanks for sharing your tips!

    1. Hello Jen,

      Thank you for your comments.

      I agree that credit scores are important when it comes to borrowing.  We all borrow through our life time and borrowing responsibly will help with our credit rating.  It is only when we live beyond our means will issues occur that will potentially negatively affect our credit scores.  If there is a product that is too expensive for us then simply put, do not purchase it and wait until we can afford it and be able to pay it off if we want to us loans.  We want to keep our credit history clean so that creditors will see that they can trust us when we want to apply for a loan.  From there we will be able to take advantage of the savings with regards to the low interest offers.

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