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10 Tips to Improve your Credit Score

man on phone looking at his credit score
image of credit score chart - showing bad, fair, good, and excellent credit brackets.
Image of credit score chart – showing bad, fair, good, and excellent credit brackets.

If a low credit score is holding you back from getting approved for loans, credit cards, or low interest rates, you may be wondering how you can improve your credit score. Everything side, nothing will improve your credit score more than paying your bills on time. However, there are a variety of other tips and tricks you may not know about that will help boost up your credit score. Here are 10 tips you can use to improve your credit score.

1. If you’re Affected by the Current Pandemic, Contact your Creditors ASAP.

Do this immediately to set up extended deadlines and deferred payments. Many credit cards, loans, and bills are now federally mandated to offer deferred payments – so give them a call to learn about their policy, get the details (in writing) and set up extensions.

2. Review your Credit Report

man on phone looking at his credit report

You are entitled to one free credit report a year from all three credit reporting agencies. Once you receive your credit report, review the details slowly to ensure there are no errors or outdated information. If you do find any errors or outdated information, request a formal removal of the errors.

You can request your credit reports online at – https://www.annualcreditreport.com/index.action

3. Pay More than Once Each Billing Cycle

Reporting agencies love to see that you make your payments on time and pay extra each billing cycle. If you can afford it, pay down your bills every two weeks, rather than once a month. This will lower your credit utilization and definitely improve your credit score.

4. Set up Payment Reminders

The easiest method is to set a reminder using Siri or Google to remind you when your bills are due, preferably a few days before the due date. Consistently paying your bills on time (and even a little before the due date) will definitely improve your credit score and overall give it a boost.

5. Apply for New Credit Sparingly

You need credit to earn credit, but how much is too much? As a general rule you should only open credit accounts for what you know you’ll use – and you shouldn’t open too many new accounts within a short period of time, since that will hurt your credit score. Plus, every time you apply for credit, that deducts a few points off your current credit score, so keep that in mind if you want to improve your credit score.

6. Be Weary of Paying off Old Debts

man typing on calculator

If a debt is “charged off” by the creditor, it means they do not expect further payments. If you make a payment on a charged off account, it reactivates the debt and lowers your credit score. This will often happen when debt collection agencies are involved.

7. Don’t Close Unused Credit Cards

Your credit history age matters – the older the better. By keeping an unused credit card that you may have had for 5 or more years open, it will drastically keep improving your credit score.

8. Pay Down “Maxed Out” Cards

Maxing out cards will negatively impact your credit score. The general guideline is to not use more than 40% of a loan or credit’s value. For example, if you have a credit card that has a credit limit of $1,000 – you should not have a balance on it that exceeds $400.

9. Have a Variety of Different Credit Lines

It’s recommended to not just stick with credit cards – mortgages, student loans, car loans, and more will work in “diversifying” your credit report. Have a variety of different credit lines open, but only as long as you can pay them.

10. Remember to be Responsible with your Credit

We understand – getting approved for a credit card with a credit limit of $5,000 can be exciting. You may be thinking of all the new items and services you can finally purchase with that amount available to you. But remember, be responsible, and only purchase items you know you can pay off. Credit cards can be dangerously tempting – but as long as you remember your goals in the long run (getting a home loan, getting a low-interest car payment) you can keep your cool and not give into temptation. We hope these tips help you to improve your credit score for the better.

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