So, you’ve read frequently asked questions about credit scores, and you also understand ways your credit score affects what you pay for credit. But what do you do if your overall credit health isn’t, well, so healthy. No worries! Here are 3 proven ways to improve your credit score.
1. Check Your Credit Report
Make a habit of checking your credit score and credit report at least once a year. You’d be surprised how many reports contain outdated, inaccurate, and/or downright wrong information. Not to mention it is often the first tipoff someone has stolen your identity. When you check your credit report, pay attention to:
- Payment Status – Double check that accounts you know to be current are being reported as such. You don’t want a “late” payment status when you paid on time;
- Account Balance – Keep in mind, most creditors submit their information to the credit bureaus monthly. So, an account’s balance may differ on the report than its real-time balance in your online account or app. What you want to watch out for is a balance much larger than you know it to be, which could indicate they missed crediting your payments and/or identity theft; and,
- Unknown Accounts – Also another sign of identity theft. Or, it could indicate someone you know opening an account in your name without your knowledge or permission.
Request your free credit report from www.annualcreditreport.com today. You’re entitled to one free report from each of the three major credit bureaus every 12 months.
Note: If you discover your credit report contains errors, you can dispute that information with the credit reporting agency. Here are links to the top 3: Experian; TransUnion; Equifax.
2. Make Timely Payments
Your payment history is a critical component in your credit score. We’ve said it once, we’ll say it again: pay your bills on time every month – all your bills, not just the mortgage and the car payment. Even utility bills, insurance premiums, and phone bills impact your credit score. Set payment reminders. Use online bill pay options. Hire a Money Manager. Do whatever you have to do to make sure those payments reach their destination on or before their due date, every billing cycle.
3. Use Less Credit Than You Have
Your credit utilization ratio, or how much of your available credit you’re using on any given day, is one of the most important factors in determining your credit health. Aim to keep your credit card balances less than 30% of their credit limits. Even if you’re paying off your balance in full every month – if your balance is more than 30% of your available credit, there’s likely to be a negative impact on your credit score when the balance is high.
It’s Never Too Late to Improve Your Credit Score
When it comes to rebuilding or improving your credit, time is on your side. Yes, even for those who have experienced bankruptcy or foreclosure. However, there are no quick fixes. But, as you’ve just read, there are proven ways to improve your credit score. All you need is the know-how (ways to improve your credit), patience (to implement the necessary actions over time), and discipline to use your credit responsibly.
Tune in next time for some of the most common myths about your credit score and credit report.
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