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10 Easy Ways to Improve Your Credit Score

 

Certain things make up the standard criteria for obtaining credit from financial institutions, one of these things is your credit score. Put simply, your credit score is an index that shows your qualification and how much you potentially qualify for a loan or facility. In this article we list out 10 easy ways to improve your credit score.

Credit scores can be ranked as follows: LOW, AVERAGE or EXCELLENT. These rankings play a crucial role in determining the interest accrued by banking institutions and loan facilities. Generally, people with excellent or high credit scores will attract lower interest than those with average or low credit scores.



improve your credit score

Regular and Early Bill Payments


One of the easiest ways to keep a good credit score is to ensure that there are no late payments on your bills talk less of defaults on payments. A secret to keeping the score high is regular week-in-week-out or monthly payments as they reflect positive finances and balance in your bills.

What you would want to avoid the most in this case however, is a condition where your case is referred to a collection agency; as far as lowering credit scores go, this is the lowest and fastest way to make sure you don’t get any loans.


Clear Off Multiple Credit Card Balances


Another way to increase your credit score is to round up all your credit cards and pay off their balances while using one or two for most transactions. The reason for this is simple; owing multiple amounts on separate cards paints a negative perception of your spending habits, and it is just wiser to make payments with one card that has the best interest rate over making payments with multiple cards.


Leave Good Debts on Your Report and Keep Strong Accounts


A common mistake made by most people is trying to have a perfect financial record. To achieve this people occasionally call their banks to have a debt removed from their report as soon as it is paid off.

Similarly, they close down accounts that have a history of good financial transactions, not bearing in mind that account statement and debt repayment history also play a vital role in obtaining credit. As long as you don’t have records of late payments, defaults or written off debts, you should be fine. Sometimes, too much tinkering has a negative effect on your credit history.


Maintain Low Credit Card Balances


As earlier said owning a credit card affects your credit score. The payment history on your card also impacts the credit score. Ideally, you should not have a balance that shows you have more than 30 – 35 percent of your available credit limit unused as this will affect your score even when you make prompt bill payments.

To boost your score, keep a balance that falls lesser than the 35 percent allowed. Demonstrate proper and wise utilization while reducing your credit through your payment history and watch your credit score improve.


Contact Your Creditors


If it looks like you might be short on this month’s payment, the first step is to reach out to your creditors and see if there is a way to re-arrange or reschedule payments to a more convenient period. Do everything possible to see that your case is not listed with the credit collectors. You can consider using debt consolidation service to help you manage the negotiations with your creditors and allow you pay off your debts in one convenient payment schedule.


Separate Your Accounts After a Divorce


If you previously ran a joint account with your ex, it may be advisable to separate from the account and have a single one. This is because the spending habits of the other reflects on the joint account and so does the joint debts and credits. As the divorce process moves on, ensure to clear all joint credit and close the account as soon as possible.

Notify all necessary financial companies that you have divested from the relationship and they will provide you the best possible options to help you avoid negative knock-on effects from your ex’s financial activities. There have been cases where a vengeful ex has left debts unpaid or taken fresh credit cards on the couple’s account during a divorce and ran up debt without any plans to repay.


Correct Inconsistencies on Credit Reports


If you go through your credit report and find an error, it is very important to take it up and ensure that the error is sorted and the old information listed therein is removed and replaced with the corrections. Also that you retrieve your credit report from the most common providers at least once a year to know what everyone has listed as your account and debt records. Take some time to identify potential issues and have these resolved before they affect your credit in the future.


Seek Authorization on Someone Else’s Card


Becoming an authorized user on someone else’s card is a positive way to increase credit score most importantly when the other person has a very good financial habit. This helps in two ways, first it helps reduce your credit utilization ratio, and secondly, all the transactions of the other person will show up in your own records. One person you can do that with is a child when you are teaching them to be financially responsible. Because you are also most likely responsible for paying off part of their credit card debts, you might as well score some cool credit points along with the cool dad points.


Increase Your Credit Limit


Applying for a credit limit increase or getting a new credit card are ways to improve your credit score. The most beneficial aspect is the reduction of the credit utilization ratio; a criterion that weighs a lot when determining credit scores. The more your credit limit, the easier it would be for you to stay within the recommended 30-35 percent usage limit. Be careful also that this also means a higher debt risk if you lose focus and have many expenses on the new credit line. Be responsible with any credit limits and watch it boost your credit score.


Avoid Excess Enquiries


Enquiries made on a credit card or account often ends up in the credit report and can be shady towards your credit score increased. Enquiries often arise when a card is being maxed out, defaults on payments and so on. Also, do not sign up for financial programs that involve your credit history being pulled up frequently. You should also research a new loan or credit card properly to know if you are eligible before applying. Having failed applications that require your credit report being requested will not help to improve your credit score but will negatively affect it.


Contact us today if you have questions about how to improve your credit score or need help consolidating debts such as credit cards and loans or if you need assistance with payday loan relief.