Raising your credit score can be a lengthy process, especially when it is in the poor range. This doesn’t mean that it is hard to raise your score, it just takes time and patience. There are several ways you can begin to improve your credit right now. These helpful tips are easy and will go a long way in helping to increase your credit score.
Get a copy of your credit report
In order to determine your credit score and if it needs improvement, you first have to obtain a copy of your report. We have all seen the commercials promoting ways to obtain your credit score. When it comes down to it, there are many people who haven’t even looked at their credit score in years, if at all. It is actually a very important thing to keep track of as you work on developing responsible financial habits. Many people believe checking their credit score might actually harm them. Federal law allows you to obtain a free report every 12 months from the three most reputable credit reporting companies, Equifax, TransUnion, and Experian. There are several websites that allow you to obtain your credit score for free, such as Credit Karma. These websites do not cost money and will not have a negative impact on your credit score.
Credit card utilization, payment history, and derogatory marks will have the highest impact on your credit score. Therefore, you will want to check to make sure there are no discrepancies or errors that might be lowering your credit score. If you find any, you can report them to have them removed, thus raising your credit score.
Pay your bills on time
It should go without saying that paying your bills on time is always a smart idea. When you pay a bill late, that late payment can show up on your credit report and cause a dip in your credit score, even if the bill is only 30 days past due. We all have a lot going on and can sometimes forget a due date. One thing you can do to help make sure your payments are on time is to set up automatic bill pay. Almost every company provides this option for their customers. Not only are you ensuring that your bills get paid on time, but automatic payments usually waive any convenience fees. If you are struggling to pay your bills on time creating a budget and calendar can also be a huge benefit
Use a credit card the right way
Although credit cards can be damaging to your credit (if used the wrong way), they can actually help improve your credit score if they are used the right way. So what does this mean? If you have a $500 credit limit, you probably do not want to max it out and only pay back the minimum payments. As stated earlier, credit card utilization is ranked as one of the highest impacts on your credit score. Credit card utilization is determined by a ratio of the balance on your card divided by the credit card’s limit. A utilization percentage of 35% or less is your best bet when it comes to money spent using a credit card. Think your score is too poor for a credit card? Think again. Secured credit cards are great option for individuals who do not meet a good credit score for an unsecured credit card. Secured credit cards have a higher interest rate and require you to make a deposit before you receive your card. This deposit is usually based off of your current credit score and can be as low as $40 or as high as $200. Secured credit cards can really help to improve your credit score (as long as you keep a low utilization percentage) within one year or less.
There are several other ways you can begin to improve your credit score for the better. Start with these easy tips and you will be on your way to gaining the credit you have always wanted!