Your credit score is one of the most important measures of your financial health. Wherever your score falls, between 300-850, tells lenders how responsibly you use credit. The higher the score, the easier you will find it to be approved for new loans or lines of credit. Likewise, the lower the score, not only will it be harder to find approval, but those approvals may come with higher interest rates.
If you’d like to improve your credit score, there are a few things you can do. It will take a bit of effort and some time, but the payoff is more than worth it. While everyone’s credit situation, these five general steps can help almost anyone.
Build Your Credit File
Opening new accounts that will be reported to the major credit bureaus is an important first step in building your credit file. Whether it’s an installment loan or a revolving line of credit, starting a good track record as a borrower can be helpful. Just be sure that these accounts are active and remain in good standing.
Don’t Miss Payments
Having a long history of on-time payments can help you achieve high credit scores over time. Consider setting up automatic payment options to keep your payment from reporting 30 days late or to avoid missing a payment altogether. Also, if you find yourself having trouble paying your bill, reach out to the grantor ahead of time and discuss hardship options.
Pay Down Revolving Account Balances
Even if you’re not behind on your bills, having a high balance on revolving accounts can lead to a high credit utilization rate and ultimately hurt your scores. Regardless of if it’s a credit card or line of credit, make sure to keep a low balance on them relative to your credit limit to help improve your score.
Limit How Often You Apply for New Accounts
While you may need to open an account or two to build your credit file, you generally want to limit how often you submit credit applications. Each application can lead to a hard inquiry, which will hurt your score if you have too many inquiries over a short period of time, which is usually 12-15 months.
One exception to this is when you’re rate shopping for certain types of loans, such as an auto loan or mortgage. Credit scoring models recognize that rate shopping isn’t risky behavior and may ignore some inquiries, but only if they occur within a span of a week or two.
Erase Credit Report Errors
According to CNN Money, a single negative report on your credit could cost you over 100 points. If you find any questionable items on your personal report, Legacy Credits can help. Legacy Credits will not only work with you to identify any questionable reporting, but they will also dispute those reports with each credit bureau on your behalf. With their team of professionals and credit monitoring software, you can trust that their removal process is streamlined to get you results.