Deciding to boost your credit score is a wise choice because of the impact of your credit score on your financial health. You can save thousands of dollars on lending products with a good credit score. With a better credit rating, you’re considered more low-risk, which lenders like – a lot.
There are five things you can do to potentially boost your score. Checking your credit score regularly, keeping your bill payments timely and cutting your utilization rate, keeping new credit requests at a minimum, and improving a lean profile is helpful. Read on to learn more about each of these options and how they may help you.
You Can Boost Your Credit Score by Seeing What Is Bringing It Down
Checking your credit score regularly can help you see what is working for or against you. This report is your best tool for getting a good handle on your credit.
You can order a free report every year from Equifax, Transunion, or Experian. Because each of the bureaus scores your credit slightly differently, getting one of each is a good idea.
Some of the most significant contributors to high credit scores include:
- Fewer new credit inquiries
- Older credit card accounts
- A mixture of loan and credit card accounts
- Low credit card balances
- On-time payment history
Likewise, contributors to bad credit include judgments, collections, higher balances on your credit cards, and late or missed payments.
Get Your Bill Payments Under Better Control
One of the best ways to boost your credit score is to get the payments that you make under control. Paid-off debts will look better on your credit report than payments currently missed or late. Showing responsible behavior is beneficial for your credit score.
Avoiding late payments is essential to maintaining a healthy credit profile. Some of the things that you can do to keep your payments on time include:
- Charging monthly bills, if possible, to a credit card to ensure payment in full each month
- Automate your bill payments using your bank account
- Using alerts as reminders when a due date is coming up
- Starting a digital or paper filing system for keeping track of bills
Try to Bring Your Credit Utilization Under 30% to Boost Your Credit Score
Credit utilization refers to the part of your credit limit currently in use. This factor is the second-most significant after your payment history.
Paying your credit card balances in full every month will keep your credit utilization low. In any case, aim for keeping this rate below 30% or less. Once you’ve reduced your credit utilization to at least 30% you will want to go further and try to reach 10%
Cut Down on Your New Credit Requests
You can boost your credit score by limiting the number of inquiries that your credit report receives. Although soft inquiries to send you pre-approved offers or performed by employers do not affect your credit score, hard inquiries will. The circumstances that apply to hard inquiries include applications for credit. Hard inquiries can affect your score for up to two years.
Although you can have hard inquiries removed, this action won’t have much of an impact on your credit score. You will do your best to focus on removing inaccurate hard inquiries.
Beef Up a Thin Credit Profile
Many people lack enough of a credit history to generate a credit score. You can apply for credit cards that report on-time payments to credit bureaus. Other options to consider include:
- Using Perch, RentTrack, or Rental Karma to improve your VantageScore
- Getting an UltraFICO account that builds a FICO score through responsible banking activities
- Using Experian Boost to build a FICO score with banking and on-time utility payments
Deciding to boost your credit score is always a good decision if you need to apply for a loan in the future, contact us to find out what products are available for you.