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Your credit score is one of the most critical numbers in your life. It can determine whether you can get a car loan, a mortgage, or even a job. That’s why it’s so important to make sure that your credit score is as high as possible. This article will discuss 15 tips that will help you increase your credit score.
What Is A Credit Score?
A credit score is a number that lenders use to determine your creditworthiness. It ranges from 300 to 850, and the higher your score, the better. Credit scores are important because they show lenders how likely you will repay your debt. You need a credit score for buying a car, taking out a loan, or applying for a credit card.
The Three Types of Credit Scores
There are three different types of credit scores: FICO, VantageScore, and TransUnion. Each score is slightly different, but they all use the same information to calculate your score. The most crucial factor in your credit score is your payment history. Your payment history includes whether you’ve made your payments on time, how much debt you have, and how long you’ve been using credit. Other factors that affect your credit score include the type of debt you have (revolving or installment), the number of inquiries on your report, and your credit utilization ratio.
How Often Should You Check Your Credit Score?
You should check your credit score at least once a year. You can get your free annual credit report from AnnualCreditReport.com. This website is the only one authorized by the government to provide your free credit report. You’re also entitled to one free report from each of the three major credit bureaus every 12 months.
What Is Considered a “Good” Credit Score?
A good credit score is anything above 700. However, a score of 750 or higher is considered excellent. If your score is below 650, you may have difficulty qualifying for loans and credit cards.
How to Increase Your Credit Score
Now that you know what a credit score is and how it works let’s talk about how you can increase your credit score.
Pay All Credit Card Debt On Time
One of the best things to improve your credit score is always to pay your credit card debt on time. Paying your debt on time shows lenders that you’re responsible with your money and less likely to default on a loan.
Request Higher Credit Limits
Another way to improve your credit score is to request higher credit limits from your creditors. Requesting a higher limit lowers your credit utilization ratio, a significant factor in your credit score.
Make Yourself An Authorized User
If you have a family member or friend with good credit, you can ask them to make you an authorized user on their account. Becoming an authorized user will help improve your credit score by adding positive information to your report.
Pay All Other Bills On Time
In addition to paying your credit card debt on time, you should also pay all other bills on time. This includes things like your rent, utilities, and car payment.
Dispute Any Credit Report Errors
If you see any errors on your credit report, make sure to dispute them. Disputing errors will help improve your credit score by removing any negative information that isn’t accurate.
Deal With Any Collections Accounts
If you have any collections accounts, make sure to deal with them as soon as possible. Taking care of any collections accounts will help improve your credit score by removing the negative information from your report.
Make Sure You’re Using A Secured Credit Card
If you’re using a secured credit card, make sure you’re making your payments on time. Making payments on time will help improve your credit score by adding positive information to your report.
Set Up Payment Reminders
One way to ensure that you’re always paying your bills on time is to set up payment reminders. This way, you’ll never forget to make a payment, and you’ll always be on time.
Keep Your Credit Utilization Ratio Low
One of the most critical factors in your credit score is your credit utilization ratio. Your credit utilization ratio is the amount of debt you have compared to your credit limit. It’s essential to keep this number low, so make sure you’re not using too much available credit.
Don’t Apply for New Credit If You Don’t Have To
Every time you apply for new credit, it shows up on your report as an inquiry. Too many inquiries can hurt your credit score, so only apply for new credit if you need it.
Keep Unused Credit Accounts Open
If you have unused credit accounts, it’s essential to keep them open. Keeping old credit accounts open shows creditors that you’re a responsible borrower and not using too much of your available credit.
Be Careful When Paying Off Old Debts
If you’re paying off old debts, be careful not to close the accounts. Closing accounts can actually hurt your credit score by lowering your credit utilization ratio.
Diversify Your Accounts
One way to improve your credit score is to diversify your accounts. Diversifying accounts means having a mix of different types of debt, such as revolving and installment.
Consider a Debt Consolidation Plan
If you have a lot of debt, you may want to consider a debt consolidation plan. Debt consolidation can help improve your credit score by making it easier to manage your debt.
Take Advantage of Score-Boosting Programs
A few score-boosting programs can help you improve your credit score. Some examples are Experian Boost and UltraFICO. These programs can help you access credit lines, which can help improve your credit utilization ratio.
Only Apply For Credit You Need
When shopping for credit, only apply for the amount you need. Only applying for the credit you need will help improve your credit score by keeping your inquiries low.
The Bottom Line
If you’re looking to improve your credit score, you can do a few things. One is to make sure you’re paying all of your bills on time. This includes your credit card bill, rent, utilities, and any other debts you may have. Another thing you can do is keep your credit utilization ratio low by not using too much of your available credit. You can also dispute any errors on your credit report and take advantage of score-boosting programs like Experian Boost or UltraFICO. By following these tips, you can improve your credit score and access better credit products.
As you can see, there are several things you can do to improve your credit score. You can get on the right track to a better credit score by following these tips. And remember, if you’re ever in doubt about your credit or what you can do to improve it, be sure to speak with a professional. They’ll be able to help you understand your situation and offer more personalized advice.
Claire is a student turned financial enthusiast who has a passion for helping others. Her goal is to help as many people reach financial independence and early retirement as possible. When Claire isn't working on her blog, you can find her buried in a good book, testing recipes in the kitchen, or outside playing with her ducks.