Your credit score is one of the most important numbers in your life. A high credit score means you’re a low-risk borrower and can get approved for loans and mortgages at the best rates. A low credit score can mean you’ll have to pay higher interest rates and may not be able to get a loan at all.
Improving your credit score doesn’t have to be difficult, though. In this blog post, Carrington Dean share the top 12 tips in order to improve your credit rating. Whether your trying to show creditors you’re reliable or looking to secure a mortgage, make sure to check out the below tips to start improving your credit rating today.
1. Know where you stand.
If you’re looking to improve your credit rating, the first step is to know where you stand. Get a copy of your credit report and credit score so you can see where you currently fall. This will give you a good idea of what areas need improvement. Once you know where you need to improve, you can start taking steps to improve your credit rating.
2. Make payments on time.
One of the biggest factors in your credit score is your payment history. Be sure to make all of your payments on time, every time. This includes credit card payments, utility bills, and any other type of loan or credit account you may have.
3. Use credit wisely.
Whenever you use credit, be sure to use it wisely. This means only borrowing what you can afford to repay, and not using too much of your credit limit. Also be sure to keep your credit balances low. High credit balances can negatively impact your credit score.
4. Keep old credit accounts open.
If you have credit accounts that you no longer use, don’t close them. Keeping those accounts open can actually help your credit score. This is because it shows that you have a long credit history, which is positive for your credit rating.
5. Get rid of bad debt.
One important factor in your credit score is whether or not you have any “bad debt.” This includes debt that is in collections or is otherwise considered delinquent. If you have any bad debt, it’s important to work on paying it off as soon as possible. This will improve your credit score over time and make it easier to get approved for loans and other lines of credit in the future
6. Don’t open new credit accounts unnecessarily.
Every time you open a new credit account, it can have a negative impact on your credit score. This is because it lowers the average age of your credit accounts, which is one factor that is considered in your credit rating. So if you don’t need to open a new credit account, it’s best to avoid doing so.
7. Use credit cards responsibly.
If you have credit cards, it’s important to use them responsibly. This means only charging what you can afford to repay, and keeping your credit card balances low. High credit card balances can negatively impact your credit score.
8. Get help if you need it.
If you’re struggling to manage your credit, there are plenty of resources available to help you. There are credit counseling services that can help you develop a budget and work on paying off your debt. There are also many personal finance books and websites that offer tips and advice on credit management.
9. Check your credit report regularly.
It’s a good idea to check your credit report on a regular basis, just to make sure that all the information is accurate. If you see any errors, be sure to dispute them with the credit bureau.
10. Have a mix of credit types.
One factor that is considered in your credit score is the mix of credit types that you have. So it’s a good idea to have a mix of credit cards, installment loans, and other types of credit accounts. This shows that you’re capable of responsibly managing different types of credit.
11. Avoid using your credit limit as an extension of your income.
Just because you have a credit limit doesn’t mean you should use it all up. Doing so can actually hurt your credit score. When you max out your credit cards or come close to doing so, it shows that you’re relying too much on credit and may be in financial trouble.
12. Make a budget and stick to it.
One of the best things you can do for your credit score is to develop a budget and stick to it. When you have a budget, you’re able to better track your spending and make sure that you’re not overspending. This helps you keep your credit balances low, which is good for your credit score.
By following these simple tips, you can start improving your credit rating. A higher credit score will make it easier to be approved for loans and credit lines in the future, and can also help you get the lowest interest rates possible. So if you’re looking to improve your financial health, boosting your credit rating is a great place to start.