Tips to Improve Your Credit Score
If your credit score is lower than you'd like, there are ways to bring it up.
Here are some strategies to quickly improve your credit.
Pay credit card balances strategically
The portion of your credit limits you're using at any given time is called your credit utilization. A good guideline: Use less than 30% of your limit on any card, and lower is better. The highest scorers use less than 7%. You want to make sure your balance is low when the card issuer reports it to the credit bureaus because that's what is used in calculating your score. A simple way to do that is to pay down the balance before the billing cycle ends or to pay several times throughout the month to always keep your balance low.
Ask for higher credit limits
When your credit limit goes up and your balance stays the same, it instantly lowers your overall credit utilization, which can improve your credit. If your income has gone up or you've added more years of positive credit experience, you have a decent shot at getting a higher limit.
Become an authorized user
If a relative or friend has a credit card account with a high credit limit and a good history of on-time payments, ask to be added as an authorized user. That adds the account to your credit reports, so its credit limit can help your utilization.
Pay bills on time
No strategy to improve your credit will be effective if you pay late. Worse, late payments can stay on your credit reports for 7½ years. If you miss a payment by 30 days or more, call the creditor immediately. Pay up as soon as you can and ask if the creditor will consider no longer reporting the missed payment to the credit bureaus. Even if the creditor won’t do that, it’s worth getting current on the account ASAP. Every month an account is marked delinquent hurts your score.
Dispute credit report errors
A mistake on one of your credit reports could be pulling down your score. Disputing credit report errors can help you quickly improve your credit. You're entitled to free reports from each of the three major credit bureaus.
Deal with collections accounts
Paying off a collections account removes the threat that you will be sued over the debt, and you may be able to persuade the collection agency to stop reporting the debt once you pay it. You can also remove collections accounts from your credit reports if they aren't accurate or are too old to be listed.
Use a secured credit card
Another way to build or rebuild your credit is with a secured credit card. This type of card is backed by a cash deposit; you pay it upfront and the deposit amount is usually the same as your credit limit. You use it like a normal credit card, and your on-time payments help build your credit.
Get credit for rent and utility payments
Rent reporting services can add your on-time rent payments to your credit reports.
Add to your credit mix
An additional credit account in good standing may help your credit, particularly if it is a type of credit you don't already have. If you have only credit cards, consider getting a loan; a credit-builder loan can be a low-cost option. Check that the loan you're considering adding reports to all three credit bureaus.
Whatever you do, focus on improving your credit as it can impact big decisions in your life. You want to get your score as high as possible for approval of things like a home loan.
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