Your credit score is a lot more than a three-digit number. Whether you will get a loan or not and whether you will be paying low-interest rate or high-interest rate, it all depends on your credit score. Your credit score tells how good you are at managing and maintaining your finances. This is the reason why we all want to have a good credit score. If you have a good credit score, maintain it. If you don’t have a good credit score, you might want to learn how to raise my credit score. This is what you are going to learn today.
How To Raise My Credit Score?
Let’s break down the whole process in 7 small and simple steps.
First of all, get and review your credit report. Even when you know your credit score. Review your credit report to learn about the factors that are affecting your credit score. These factors can help you in improving your credit score. Following are the seven actions you can take to improve your credit score. These actions will also help you in rebuilding credit after bankruptcy.
Pay bills on time
First of all, lenders want to know whether you are paying your bills on time or not. They take your payment performance very seriously. Lenders try to predict your future performance from your past performance. So, paying bills on time can play a part in improving your credit score.
Make timely utility and cell phone payments to get credit
Make sure that you are not delaying your utility and phone payments. By making your utility and phone payments on time, you can send a positive signal. You are showing that you are taking your financial status and credit score very seriously.
Keep credit card balances low and pay off your debts
Your credit utilization ratio also plays an important role in the calculation of your credit score. Here is how this ratio calculated. Your credit card balances at a given time are added. This number is then divided by your total credit limit. If your credit utilization ratio is less than 30%, lenders are going to like it. You can reduce this ratio by paying off debts on time keeping your credit card balances low.
Open new credit accounts only when required
You might have been told that applying for and opening new credit accounts can improve your credit score. Don’t do that just for having a better credit mix. Opening unnecessary accounts can affect your credit score in many ways.
Avoid closing unused credit cards
If they are not costing you any annual fees, keep your unused credit cards open. This can be a smart strategy. Closing unused accounts will increase your credit utilization ratio.
Applying for too much new credit will result in multiple inquiries
You can increase your credit limit by opening a new credit card. However, this will also create a hard inquiry. Hard inquiries have a negative impact on your credit score and these hard inquiries are going to stay there on your credit report for 2 years.
Dispute errors and inaccuracies
Get credit reports from all three credit bureaus and review for errors and inaccuracies. Incorrect information can decrease your credit score and correcting this information can increase your credit score.
If you want to stay informed about your credit performance, review your credit report regularly.