We all have a lot of important numbers in our lives, but when it comes to borrowing money, your credit score is one of the most important. Credit scores are something of an enigma to the average consumer, because we don’t have free access to them like we do our credit reports. But you can find out your credit score by paying a small fee, and there are also online calculators that will help you estimate it based on your credit history.
In order to borrow money from many lenders, you’ll need a credit score of at least 620. And if you want the best interest rate, you’ll need an even higher score. But what if your score is on the low side?
Here is some information and advice on ten things you can do to move your credit score up.
1. If you’ve never borrowed money, get a credit card. If you have no credit history, you’ll need to get one in order to start building up your credit score. If you can’t get a card on your own, try using a cosigner. Or you could get a secured credit card. You’ll have to make a deposit equal to your credit line, but it will help you get a credit history started.
2. Mix it up. For those who have limited experience with credit, a lack of diversity on your credit report can lower your score. You should ideally have experience with both credit cards and installment loans.
3. Make your payments on time every time. A single late payment can bring a good score way down. If possible, set up automatic payments to avoid missing due dates.
4. Pay down your balances. Carrying a high balance on a credit card can significantly lower your credit score, so work on paying them down. Paying down installment loans will also help raise your score, but not as much.
5. Stop making purchases with your credit card. If you’re carrying a balance, you need to concentrate on paying it down. Making new purchases won’t help you accomplish that.
6. Spread out your credit. Having a high balance on a single credit card can be viewed as a negative. If you have other cards with lower balances, transfer some of the higher balance to them to even things out. Utilizing 30% or less of your credit limit on each card is a good rule of thumb.
7. Check your credit report. Inaccuracies on your credit report can be detrimental to your credit score. Take advantage of the opportunity to get a free report from each of the three major credit bureaus each year, and examine it carefully. If you find errors that could hurt you, report them immediately so that they may be removed.
8. Ask creditors for help. If you’ve made late payments or fallen behind but are cleaning up your act, you might be able to talk creditors into removing derogatory information from your credit report. It never hurts to ask.
9. Keep old accounts open. Longer credit histories equal higher credit scores, so if you have an old credit card that you haven’t used in a while, consider using it to pay a recurring bill and then paying the balance in full each month. This will ensure that it continues to appear on your credit report.
10. Consider credit counseling. If your credit is in bad shape, credit counseling can lower your payments and interest and help you get caught up. You won’t be able to borrow while you’re on the program, but once you’ve completed it your credit score will be much better.
Following these tips can help you improve your credit score. This in turn means it will be easier for you to obtain a loan and you’ll receive much better interest rates. It’s well worth your time and effort.
We all have a lot of important numbers in our lives, but when it comes to borrowing money, your credit score is one of the most important. Credit scores are something of an enigma to the average consumer, because we don’t have free access to them like we do our credit reports. But you can find out your credit score by paying a small fee, and there are also online calculators that will help you estimate it based on your credit history.