6 Ways to Boost Your Credit Score
An excellent credit score is the ultimate goal of every financially responsible consumer. Three simple digits tell a story of accountability, good financial sense, and the ability to spend mindfully. A great credit score also unlocks doors for affordable loans, new cars, and more.
Achieving and maintaining an excellent credit score is oftentimes easier said than done. There is no quick and easy way to dramatically boost your score over a short amount of time, but there are steps you can take to increase your credit score gradually.
1. Pay your bills on time
Your payment history is the single most important factor in determining your score. A missed credit card payment can significantly impact your score and it can take months or even years to recover the loss. Set a reminder a few days before your bill is due, or schedule payments in advance to ensure you never miss a payment.
2. Reduce your credit utilization ratio
Credit utilization ratio refers to the amount of available credit you have used. It’s best to keep your utilization under 30%, or even 10% if you can. This means, if you have $50,000 of available credit, it is best to keep your usage below $15,000 and, ideally, below $5,000. It can also be a good idea to accept offers of increased credit or to request an increase on your own, which can instantly bring down your credit utilization ratio. However, only go this route if you know you are not at risk of overspending as soon as you have more credit at your disposal.
3. Use your cards
Taking a pair of scissors to credit cards can seem like a good way to increase your credit score, but you need to use your cards to keep your score high. A simple way to use your cards regularly but not overspend is to charge fixed expenses, like monthly subscriptions or your phone bill, to your card. Just be sure to pay the balance in full before the credit card bill is due.
4. Work to pay down outstanding debt
If any of your cards are carrying a balance from month to month, showing that you are working to get rid of this debt can do wonders for your credit score. Maximize your monthly payment by trimming an expense category in your budget and channeling that extra money toward your credit card bill. Don’t be afraid to reach out to your credit card company to ask for a lower interest rate as you work to pay off debt.
5. Look for errors on your bill and credit history
A fraudulent charge on your credit card can bring down your score without your knowledge. That’s why it’s important to check your statements each month and to look for charges you don’t remember making. If you see anything suspicious, contact your credit card issuer immediately to dispute the charge.
6. Become an authorized user on another cardholder’s account
If you’re new to the world of credit, and you’re looking to thicken your credit file to build your score, becoming an authorized user on another cardholder’s account can be a great way to get results quickly. Team up with someone who has excellent credit and never misses a payment. Your partner’s responsibility will reflect well on you and help build your credit history and boost your score.
Credit scores are a crucial component of financial wellness, but achieving and maintaining a high score can be challenging. Use the tips outlined above to start boosting your score today.
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