Having bad credit is a problem that, unfortunately, impacts your ability to make large purchases and increases your interest rates. Regardless of where you are in your credit journey, there are steps you can take to improve your credit score. (This is not an ad).
Review Your Credit Report
First and foremost, you’ll want to get a baseline of your current credit. A good free starting point is via the Credit Karma app, which allows you to view your Experian and Equifax credit scores and access the information impacting them. The breakdown for each report includes any negative factors affecting your credit, any current debt, and your standing with those creditors. Basically, this report gives you a strong overview of your current credit score and areas in which you can improve.
You are also entitled to free reports from the three major credit bureaus. Use AnnualCreditReport.com to request them, and check for mistakes, like a mistaken late payment, or someone else’s activity on your account.
Stop Applying for More Accounts
Debt is one factor considered in a credit score, but your credit score can take a hit every time you apply for a new account. Any hard credit inquiry is going to show up on your credit score. So rather than applying for new accounts, focus on the ones you have and pay them down. As a general rule of thumb, if you don’t need the new credit account, don’t open it.
Make Payments in Full and On Time
As mentioned, your payments impact your credit, as they show creditors whether you are up to date on your bills, as well as the total debt you currently have. Making improvements to your credit score is as simple as paying your balances on time and in full. You’ll be in better standing with your creditor, which can increase your credit score. A quick tip is to not charge over 30% of your account balance as well!
Pay Your Bills More Often
While credit card bills are often due monthly, when you pay them off more frequently, you can lower your credit utilization, which, in turn, can improve your credit score. Rather than letting that debt sit there until the minimum payment is due, take the initiative to pay it in advance, then pay off whatever else has accumulated on the due date. Set a schedule for yourself to pay off the balance every two weeks.
The Bottom Line
Your credit score is an important number that can affect most major purchases – cars, homes, insurance, and more. Following these simple steps can help to improve your score and make life easier for you in the future.