Having a good credit score can affect many areas of your life. Your credit score can affect your ability to qualify for a bank loan or favorable interest rates. Potential employers and landlords may also run a credit check to see what your score says about your past level of financial responsibility.
No matter where your credit score is right now, the reality is that there’s always room for improvement. Here are some quick tips for boosting your credit score.
Know Your Starting Point
The key to successful credit score repair is creating a plan of action. It’s important to know what aspects of your financial behavior could be affecting your overall score so you’re in a stronger position to make informed decisions about spending, repayments, and borrowing more money.
Order a copy of your credit report and know exactly what’s on it. Take a look at your current score and then check out the listings entered on the report. If you notice any that aren’t correct, get them removed as quickly as possible.
Catch Up Past Due Payments
Go through all your current bills and repayments and be sure you’ve caught up any past due amounts you owe. Your repayment history accounts for a massive 35% of your total score, so it’s important to be on time with all future payments if you hope to increase your credit score and keep it there for good.
Reduce Credit Card Balances
Even if you always make your repayments on time every month, carrying over high credit card balances could have a negative impact on your score. A full 30% of your credit score is based on your credit utilization rate.
If you have a few credit cards with balances at or near their full credit limit, your score will be affected. Work out ways to reduce those balances so they’re no more than 30% of the total credit limit available. When you keep your balances low on credit cards or other types of revolving credit, your score will be higher.
Consolidate Some of Your Debts
If you’re struggling to stretch your budget far enough to start paying down your existing credit card balances, consider whether consolidating some of them might help.
Rolling your outstanding debts into a consolidation loan helps to streamline your finances. You only have one repayment to think about each month instead of worrying about several.
You should also find that the interest charged on a consolidation loan is lower than the exorbitant rates charged on credit card balances, so you’re saving money. What’s more, the lower interest rate should translate to reduced monthly repayments.
Keep Older Accounts Open
Even if you do consolidate some of your debts or roll outstanding credit card balances into a new loan, consider keeping at least one of your older accounts open. 15% of your credit score is based on the length of your credit history, so keeping an older account open could help boost your score. Just be sure the balance on the card is paid off at the end of each month.
Boosting your credit score can be challenging, but it’s certainly not impossible. The key is to take control of your finances and consider the best ways to put your hard-earned income to good use.