How To Improve Credit Score?
A poor credit score can affect many things – approval for a loan, interest rate on a loan, an extension of a credit limit, and more. If your credit score is below 760, take the following steps to build or improve it:
Get a Credit Card (if you don’t have one already)
Owning and using a credit card responsibly can have a major impact on your credit scores. If you don’t qualify for a regular credit card, get a secured credit card which offers a credit limit equal to the deposit you make. Also, make sure the card reports to all 3 credit bureaus.
Check Your Credit Report
You can request a free copy of your credit report from the credit bureaus and check it for errors. Make sure that it does not list any incorrect late payments for any of your accounts, and also that the amount owed for each of your accounts is accurate.
Add an Installment Loan
Since installment loans require a fixed monthly payment, they require more discipline and budgeting. By showing that you are responsible for paying your credit card as well as your installment loan, you can quickly improve your credit scores.
Pay On Time
This cannot be stressed upon enough – yet many people get reckless when it comes to payments. Paying off your credit card balance in full at the end of every month can have a major impact on your credit scores. Delinquencies, even minor ones, can taint the score.
Pay Down Your Balance
A big gap between the credit you are using and the available credit limit is very appealing to lenders. Try to keep your expenses 30% below your credit limit. If you have exceeded the credit limit, pay off the balance, starting with the cards that are closest to their limits.
Use Your Cards Right
Even if you pay off your balances in full each month, charging big balances on your card can hurt your scores. As mentioned earlier, experts advise limiting your charges to 30% or less of your card’s limit.
Dust Off an Old Card
Older credit histories are also favorable in the eyes of lenders. But if you haven’t used one of your old cards in a long time, the card issuing company might either close the account or stop reporting them to the credit bureaus. By using old cards occasionally, and paying off the balance in full, you can improve your credit score.