All You Need to Know About Improving Your Credit Score
By A credit score reflects your credit management patterns, with emphasis on recent payment information. Making a habit of the following actions will improve your credit scores over time.
Always Pay Bills on Time
When lenders review your credit report, what they’re interested in seeing is how reliably you pay bills. This is because your past payment performance will inform them about your future performance.
Paying all your bills on time every month will positively influence this credit scoring factor. On the other hand, paying late or settling an account for less than what was agreed on can negatively affect your credit score.
Keep Your Credit Utilization Ratio Low
This ratio is calculated by adding all your credit card balances at a given time and dividing that number by your total credit limit. People with the best credit scores often have credit utilization ratios of 30% or less.
There are two ways you can keep this ratio low:
– Keeping the balance on your credit card low
– Becoming an authorized user on another person’s account (make sure they use credit responsibly).
A low credit utilization ratio means you haven’t maxed out your credit cards. This tells lenders that you know how to manage credit well.
Think Twice Before You Apply for And Open New Credit Accounts
From creating too many hard pulls on your credit file to tempting you to go on a spending spree, unnecessary credit can negatively impact your credit score in several ways. Apply for and open accounts only when you really need them – and not just to have a better credit mix.
Don’t Close Unused Credit Cards
As long as you’re not paying any annual fees – keeping unused credit cards open is actually a smart idea. Closing an account can increase your credit utilization ratio and lower your credit scores.
Regularly Monitor Your Credit Reports for Inaccuracies
Any inaccuracies on your credit reports can drag your scores down. Make sure to monitor your credit reports on a regular basis – this will help you spot errors before they can do damage. Cross-check credit reports at all three credit reporting bureaus and if you spot any incorrect information, you can dispute it and get it corrected right away.