5 Tips to Improve your Credit Score

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Your credit score is important in determining your financial health. It helps lenders know how responsibly you use your credit. If you have a good credit score, it will become easier for you to get approved for new loans. Moreover, the higher your credit score, the lower the interest rates you’ll qualify for. There are numerous ways to improve your credit score. It will just take some time and effort on your part but it can be done. Here’s how you can achieve a better credit score.

Don’t miss payments

Your payment history can have a huge impact on your credit score. Having a positive history with on-time payments can help you achieve higher credit scores. You can do this by paying your loan or credit card payments within 29 days because payments that are almost 30 days late can be reported to the credit bureaus, which can hurt your credit scores. For the minimum amount due, you can set up automatic payments as this will help you avoid missing a payment.

Make frequent payments

Small payments known as micro-payments can help you better your score. Make small payments throughout the month to improve your credit. When you make multiple payments throughout the month, the needle moves on a credit score factor known as credit utilization. This is also a very important factor that influences your credit score.

Ask for higher credit limits

When your balance stays the same but your credit limit goes up, it automatically lowers your credit utilization, which helps improve your scores. Contact your credit issuer and ask if you can get a higher credit limit but without the hard credit inquiry. Remember, a hard inquiry can temporarily drop your credit scores a few points. If you had a positive credit experience or your income has increased, you have a better chance of getting a higher limit.

Limit how often you apply for new credit

You may need new accounts to build your credit file, but make sure you limit how often you submit credit applications. This is because every time you submit a new application, it can lead to a hard inquiry which can hurt your score. Regularly opening new accounts can also decrease your average age of accounts and that could also hurt your score.

Dispute credit report errors

One of the reasons your credit score is going down can be due to mistakes on any of your credit reports. Fixing those mistakes quickly can help improve your scores. Check all the reports carefully. Sometimes, payments are marked late even when you paid on time. Once you have identified all the errors, make sure you file a dispute with the credit bureaus. Credit bureaus usually have 30 days to investigate and respond to a credit dispute.

 

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