How to Improve your Credit Score

credit cards
Getting a good credit score takes time

Your credit score plays a vital role in your life. Having an excellent credit rating makes life more affordable and convenient. Even if you don’t need a score now, it is crucial to do the things that will help build the best credit possible.

A good credit score means more than being able to get a loan with the best terms and deals. It is also helpful for when you need to save money on rent or utilities. But the other hand, having a bad credit rating could affect various facets of your life. Don’t worry. A bad credit won’t have to haunt you forever. Here are some steps you could take to get started on your path to better credit.

Ensure accuracy of credit reports

The first step to fix your credit score is making sure that your credit reports are accurate. Credit reports may have erroneous information on them. Get a free copy of your credit report from the major credit bureaus – TransUnion, Experian and Equifax. Your credit rating depends on the credit report, make sure the all information is correct. If you spot a mistake on the report, dispute it right away. Otherwise, your credit score will reflect that mistake.

Keep your balances low

One of the most significant factors affecting your credit score is how much available credit you have versus how much you have already used. This is credit utilization. The lower your credit utilization, the better. Boost your credit score by paying off your balances. Keep the remaining balance low as well.

Cut small credit card balances

If you have several credit cards, this is one important advice you should follow. Eliminating nuisance balances is an excellent way to improve your credit score. This strategy is helpful. Your credit score includes the number of credit cards that have existing balances. To avoid further hurting your credit rating, try to use the same card on your purchases. Zero out the balances on the rest. Start with the card with small balances. Then stick to one or two cards that you can use for everything.

Pay your bills on time

The biggest factor that determines your credit score is your payment history. Being late on your payments for more than 30 days can drag down your score. Make sure that you don’t miss any payments or your score will drop by 100 to 300 points. As you work on getting your bills paid on time, make it a habit to record your spending, too. Buy what you can afford to pay every month. Don’t spend more than what you can pay for.

Open a credit card if you don’t have one

If you don’t have a credit card at the moment, it will help to have at least one or two. To boost your credit score, make sure that you use the credit card responsibly. Only use it whenever needed. Also, make sure that you know how to repay it.

Leave old debt on your report

Allowing old debt to reflect on your credit report isn’t bad. In fact, it can even help improve credit rating. Getting old debts and old accounts taken off the report after getting them paid isn’t a good idea. So don’t get rid of old debt anymore. They are good debt because it means that you have handled them well and have paid them off as agreed. And they are good for your credit. The longer they stay on your report, the better.

Improving your credit score doesn’t happen overnight. It takes a lot of patience and time, but you’ll get there. If you need to get a loan with bad credit, follow these steps to get started on the right track. Also visit The Auto Warehouse for your auto loans questions.