How To Improve Your Credit Score
A credit score is one of those things most Americans don’t think about on a day-to-day basis. But at certain points in your life, a low credit score can cost you big bucks for various types of loans, and it can even prevent you from landing a new job. For these reasons, improving your credit score should always be a priority. Here are four key ways to get started:
Know Where You Stand
The most important part of personal improvement is to track your progress. So you need to know where you stand today, and then monitor your progress as you embark on your improvements. You can get a free copy of your credit report from annualcreditreport.com. Note that this is the free government-sanctioned site where each of the three major credit agencies have to provide you a free report once per year. Don’t visit other sites that may come up during an online search. Review your credit report for any discrepancies. Next, you’ll need your actual “score,” which is different from the credit report. You can purchase a credit score from numerous rating agencies, but the most commonly used score in the industry is known as the FICO score, which can be obtained on various websites. Once you have your FICO score, make sure to use the same score for future comparisons, as some ratings agencies calculate their own scores (which aren’t necessarily consistent with other companies’ scores).
Pay Off Overdue Bills Immediately
The first issue you’ll want to remediate is any overdue bills. This way, those bills either aren’t reported on your credit report anymore or are no longer shown as past due. Once that’s complete, focus on routine bills.
Continue to Pay Bills on Time, Even If…
Always pay your regular recurring bills on time even if you can’t pay credit card bills in full. In the long run it may be better to take some interest payments on a card, rather than end up with a late fee plus interest payments plus a credit score hit later too. If having to choose between paying only some bills in full and paying the minimum amount on all bills, the latter is probably desirable from a credit standpoint. However, the ideal solution is never to spend more than you are able to pay back in full.
Focus on Total Credit Limit, Not Number of Cards
Some people think they’re better off canceling a bunch of cards at once to show they’re not using credit, but all that does is decrease the total amount of credit available while leaving the same amount of debt. This can look bad on your credit report. Having credit for a longer period of time is beneficial as well, so if you have many recent accounts, that doesn’t reflect well on the score either. If you have excess cards, consider canceling only one every several months instead of all at once.
With these starting behaviors, you should see a pretty quick improvement in any of the major company credit scores within the first year.
The information in this article is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. The information in this article is not intended to be and does not constitute financial or any other advice. The information in this article is general in nature and is not specific to you the user or anyone else.