If your credit score isn't what you'd like it to be, don't worry. You can take steps to raise it and improve your financial situation.
A high credit score can lead to lower interest rates on credit cards, personal loans, student loans, and even mortgages. As a result, you'll have lower monthly payments, which allows you to put more towards other goals, such as paying off debt, beefing up your emergency fund, or contributing more to college or retirement.
However, a good credit score has more benefits than just low interest rates. It may sometimes affect whether you qualify for a job or a new apartment.
Increasing your credit score takes time, patience, and determination, but the results are well worth the effort. The hardest part is getting started. Use these tips to get started.
1. Pay your bills on time
Payment history is the most important factor for your FICO and VantageScore, according to Experian. From a lender's perspective, a history of timely payments indicates that you'll stay on top of your debts.
2. Keep your credit utilization rate low
Compare your balances to your credit limit to ensure you're not using too much credit, a risky practice.
As a rule of thumb, it's recommended to maintain a 10% utilization rate. Your utilization rate may also be affected by the date on which your credit card provider reports to the credit bureaus.
With high balances and mounting interest payments on your cards, consider consolidating with a 0% introductory rate balance transfer credit card, but make sure you understand when and by how much the rate will increase.
3. Leave old accounts open
Closing your credit card account can actually lower your credit score since you will now have a lower credit limit. Keeping balances on other credit cards or loans will increase your utilization rate.Therefore, keep the card with a balance of $0 instead.
4. Only apply for credit you need
Each time you apply for a new line of credit, a hard inquiry is made on your credit report. This lowers your credit score temporarily. Do not apply just to see if you are approved or because you have been prequalified.
5. Be patient
You won't see a dramatic improvement in your credit score overnight. The best way to achieve a high credit score is to develop good long-term credit habits.
Establish good habits, such as paying your balances on time, keeping a low utilization rate, and only applying for credit when you need it, and you will see the impact on your score over time.
6. Monitor your credit
Monitoring your score’s fluctuations every many months can help you understand how well you’re managing your credit and whether you should make any changes. Still, you shouldn’t make any final decision you make solely on your credit score.
7. Consult with a credit expert
If you're unsure if there is a mistake on your report or you're having trouble getting the mistakes fixed, call for help.
Clover Credit Solutions will know how to identify and correct erroneous information on your report and help increase your scores.
If you'd like your free consultation give us a call!