Your credit score is one of the most important things that define you in the United States. If you ever want to get a loan, a mortgage or refinance your home, this is going to be one of the most important aspects that your creditor looks at. For people with low credit scores, life can be frustrating. And although it may seem impossible to raise, it’s not hard if you follow these 5 easy tips. If you do these things, you can easily increase your credit score by more than 100 points.
1. Make sure your credit report is accurate
It is extremely important to know that your credit report is accurate. After getting a copy of your credit report, it’s important to check it carefully. A large percentage of people with bad credit are those who miss mistakes on their reports. Be diligent! According to the Federal Trade Commission, 5% of people have mistakes on their credit reports.
2. Be careful with your balance
If you’re trying to raise your credit score, one of the worst things you can do is hold a high balance. With a high balance, it’ll be impossible to raise it. What does that mean exactly? your credit balance is all about its percentage, meaning the percentage of credit you’ve used out of how much credit you actually have. The lower that percentage, the better. Err for lower than 40% of usage, less than 30% is even better. If you’re really eager to increase your credit score, aim for less than 20%. One of the ebst ways to keep this low is by paying your balance several times throughout the month, or when your credit utilization is creeping up faster than you’d like.
3. On-Time Payments
Late payments hurt your credit score more than you can imagine. This is because credit scores are highly influenced by recent payments. However, this can also be a helpful thing, because paying off your recent payments perfectly on time can help offset an late payment. A missed payment is another story altogether, and can hurt your credit record for seven years. In order to never miss your payments, sign up for automatic payments. This is extremely important, even if you think you can pay your bills, on time, mistakes happen. This is how you avoid the mistake.
4. Old debt is useful
Just because you have old debt on your credit report, it doesn’t mean that creditors think you’re unreliable with payments. This holds true as long as the old debt is good debt. For example, if you finished paying off your home loan, and didn’t miss payments, don’t call your credit agency and try to get it removed. That record shows that you have history in borrowing money and paying it back. The longer your credit history, the better. Leave your good, old debt on there as long as possible. This is one amazing trick for boosting your credit score!
5. Opening new accounts
When you open a new credit card account, you do gain the benefit of having a higher credit limit, however there are also risks associated with too many accounts. Creditors see risk in people with too many lines of credit. Whenever you apply for credit (in any form) an enquiry goes on your credit report. Enquiries are never good for your credit score. So even if you open a new phone line that you pay on credit, that enquiry will appear on your credit report. In order to raise your score, the most important thing is to avoid negative events, like enquiries.