Tips for improving your credit score
A strong credit score could not only save you thousands of dollars in interest over your lifetime, but it will also take you places. Buying things like a home, vehicle, or any other large purchase usually requires a good credit score.
A weak credit score could not just cost you more money, but it can also close doors in your life, and nobody wants that. The good news is, if you let your credit score slide downward over the years, there are things you can do to improve it! It won’t happen overnight, but it all makes a big difference.
- Pay on time
The most important factor in improving your credit score is making your payments on time. There is no way around this. Automated bill payments can be helpful, but if your accounts tend to dip below zero from time to time, a rejected payment will also cause you problems.
- Keep your balance low
When using credit, the ratio of your balance vs overall available credit matters quite a bit. It's best to keep your credit utilization ratio under 30% - but the lower the better.
- Pay off old accounts, then leave them alone
After paying off your older accounts, keep them around. Credit scores like fiscal restraint, and when trying to repair yours, having some older, zero-balance accounts should help.
- Limit new applications
While checking your credit score by yourself does not affect it, applying for credit does. If a business or financial institution has to run a credit check on you, that will leave a small mark behind, so limit how often you do this. It’s also better, in general, not to apply for a ton of credit while trying to improve your score.
- Diversify your credit
Oddly enough, different types of credit can help improve your score. Lenders like to see that a person can handle different arrangements, such as credit cards, student loans, car payments, or mortgages.
- Keep an eye on your credit
Errors happen. You should always check your credit score at least once or twice a year. This helps keep tabs on fraud as well as human error.
