Ways to Boost Your Credit Score
It is a sad truth that a poor credit score will cost you a lot of potential benefits in life. It is hard to keep your credit rating up, but it will only take one delayed payment to pull it down. Poor credit history denies you several opportunities for a better life. However, it is not yet the time to give up. This article will provide you simple and practical tips to improve your credit ratings significantly.
1. Filter Your Credit Reports
Experian, Equifax, and TransUnion are the three credit agencies that keep records of your credit history. You are entitled to a free copy of your credit report every year. Go over these reports and look for possible errors including:
Late payments you did not make
Closed accounts that are tagged as open
Incorrect credit limit figures
Should you find erroneous entries, you can notify the credit bureau in writing and ask for a correction. Simple corrections in your credit report could make a huge impact on your credit score.
2. Minimize Your Credit Card Utilization
Usage of your credit card is calculated by dividing your outstanding balance to your credit limit. Let us say your credit limit is $5,000 and you have a balance of $500. It makes your credit card utilization at 10%. The only way to lower your utilization rate is to keep your balance low. People with the highest credit ratings are those whose utilization rates are around 6%.
3. Avoid Applying for New Credit Cards
It is not advisable to open too many credit cards, so don’t apply too often. It creates an impression that you are in financial trouble. Applying for too many cards is used by some people to reduce their utilization rate since they can divide their purchases among several cards but this could hurt your credit score in the process.
4. Pay in Large Amounts
People who are enjoying excellent credit ratings are those who pay their balances in full end of every month. If you can’t afford to pay it in full, ensure to pay a little more than the required minimum payment. Not only that you are saving yourself from higher interest, but you are also keeping your utilization rate to a minimum. As mentioned, lower utilization rate means higher credit score.
5. Keep Accounts Open and Active
Some people want to pay their balance and close their account to be debt-free. It’s a good thing only that it has an adverse impact on your credit score. To avoid your score from plummeting, you can make small purchases like grocery items and just pay everything at the end of the month. This technique will keep your account active, and you can add extra points to your score.
6. Allow Your Children to be Authorized Users
This method is used by parents to build up the credit score of their children. They are usually making their kids authorized users and another card on their name will be issued to make purchases. What makes their credit grow is the fact that all transactions made on the account will be included in the authorized user’s credit report. It’s a good start in building a solid credit.
If you follow these tips, you will not only boost your credit in 2016, but eventually gain control over your finances.