Getting a good credit score isn’t as hard as it sounds. It’s important to be intentional about your financial health. Not only can it help buy a home later in life, some employers and industries rely on employees who have healthy credit. If you have a job in the financial sector, it’s especially important to work on upping your score. Here are some of the best ways to boost your credit score.
Check Your Credit Reports
It’s important to check your credit report regularly. It helps you keep an eye not only on your score, but on any suspicious activity that might arise. You’ll also be able to uncover any derogatory marks on credit reports that might be impacting your overall score. These can include late or missed payments, collections, foreclosure, and even tax liens. You can sometimes get these marks removed which can boost your credit score.
Pay off Debts
If you have revolving credit like a credit card, it’s best to use it and pay it off regularly. You can also pay off student loans and other non-revolving credit. When those remain on your credit report, it helps boost your score and shows that you are reliable at paying back debts. You’ll also want to pay off car loans as well. You’ll improve your credit score as you pay off debts.
Make Payments on Time
While a few days late every once in a while may not affect your credit score right away, you don’t want to make a habit of it. Pay your bills on time and pay your debts on time as well. Making the minimum payment shows the credit reporting agencies that you are reliable and know how to manage your money. This allows them to boost your score. On time payments are one of the best ways to boost your overall score.
Limit How Often You Apply For Credit
Don’t apply for store cards or other loans regularly. It’s best if you limit those to only when necessary. Too many requests for credit checks negatively impacts your credit score. When you are going to make a large purchase such as a car or house loan, these extra checks can impact your qualification for lending. This includes higher interest rates, lower credit offers and even might get you a decline.
Check Your Debt-to-Income Ratio
People with higher income can afford higher debt loads than people with lower income. However, when you need to boost your credit score, it’s important to keep that ratio as low as possible no matter how much you make. This can mean paying off small debts first, and then working on paying down or off larger debts. If you need help paying things off, you can ask creditors for lower interest rates. This ensures that more of your payments go to the debt amount and not to interest payments.
Consolidate High Interest Debts
Many people find that managing multiple debts in one easy to manage monthly payment allows them to pay it off quicker. It also decreases the amount going to interest especially for high interest loans and credit cards. If you do consolidate, it’s critical that you stop using the credit cards that you consolidated so that you don’t end up in more debt than you are right now. You can also use balance transfer cards to put all your credit cards on the same card and often get 0% interest for a limited time on those transfers.
If you notice a mistake on your credit report, don’t be afraid to dispute it. Things like bad debts you paid off or credit checks you never approved can be removed if you follow the right channels. You don’t have to live with these errors on your report that give you a lower credit score. You can get them repaired.
Make a Larger Than Usual Debt Payment
If you’re used to paying minimum amounts only, give your credit score a boost by making a large payment. A one-time payment on your debt that is a large amount can improve your overall credit score. Sometimes a large payment can give a big 10-15 point boost which can be enough to put you in a good credit range if you aren’t there already. With all these tips and more, you can improve your credit no matter your financial goals.