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How to Improve Your Credit Score

Posted on the 24 March 2020 by Ironwood Finance @IronwoodFinance

Many of the expenditures we make in our lives rely on credit, which is why you must maintain a good credit score. Also, good credit doesn't just help you get loans and credit cards; it helps you get apartments, cell phone contracts, and even a good job.

In this article, we tell you ways to improve your credit score if it isn't where you want it to be.

Check Your Credit Report

Stated by a credit repair expert, the first step to improving your credit score is to get a copy of your credit report to see what your history says about your spending and paying habits, and to check for accuracy. Mistakes on credit reports are common, so it's wise to check your report regularly to make sure everything is legit.

There are three main credit bureaus to check: TransUnion, Equifax, and Experian. Each has different information regarding your credit, so check the reports from three.

Examine Where Improvements Are Needed

There are a variety of factors that go into your credit score: Payment History, Debt to Credit Ratio, Account Ages, Types of Accounts, and Credit Application History.

So, for example, let's say you've had a few late payments, which are bringing down your score. Focus on making payments on-time from now on to bring your score back up. Also, if you're carrying a lot of debt, paying off cards and accounts raises your score.

Pay Bills On Time

Payment history comprises 35% of your credit score and is the factor affecting your score the most. So you must make payments on time every month.

Even a payment that's a few days late can cause a drop in your credit score, so paying on time is the single best way to improve your credit score.

Reduce Debt

How much you owe relative to the amount of credit you have comprises 30% of your credit score.

A good rule of thumb is to keep your credit to debt ratio below 30%. If you're carrying a lot of debt, buckle down and pay off those accounts quickly to see your score improve.

Don't Apply For Too Much Credit At Once

Creditors also look at how many inquiries were made to your credit report. Sometimes called 'hard pulls' or 'hard inquiry,' these occur when a lender checks your credit to decide on lending you money or extending more credit to you.

Hard inquiries lower your credit score a few points, which isn't too bad. However, if you apply for many credit cards or loans in a short timeframe, causing multiple hard inquiries, creditors view you as a higher-risk customer because it looks like you're hard up for money and are seeking credit quickly.

The good news about credit scores is that there's always a way to fix bad ones. If you have a score that isn't where it needs to be, you can take steps right now to bring it up.

It may take time, but if you're diligent and practice good financial habits, it can be done, and you'll soon have the purchasing power you need to have the things you want.

How to Improve Your Credit Score
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How to Improve Your Credit Score

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