Your credit score is a three-digit number which helps lenders determine the risk of lending you money. If you aren’t getting approved for credit cards or loans, you may need to improve your credit score. Building your credit isn’t a speedy process, but there are several things you can do to start paving the way to a better credit score.
1. Review Credit Reports
You can receive one free credit report a year from each of the three national credit bureaus (Equifax, Experian and TransUnion) . Because your credit score is based on your credit report, it’s extremely important to make sure all the information is correct. A lot of the time, there is information that is not accurate, and your credit report will reflect that misinformation. Dispute any errors that you come across. Your score will be updated as soon as the information is updated.
Tip: Pull one credit report each quarter, since you get one free report from EACH of the three credit bureaus per year.
2. Set Up Autopay or Reminders to Pay
Paying your bills on time can improve your credit score. Autopay is a simple way to not have to worry about your bill’s due dates. If autopay is not an option, keep payment deadlines in a calendar and stay on top of them.
3. Make Frequent Payments
Making more than one payment per billing cycle will get you ahead of your balance faster and lower your credit utilization. This will help lower your credit score.
4. Think Twice Before Applying for New Credit
A higher total credit limit might sound nice, but it will negatively affect your score if you apply for or open several new accounts in a short period of time.
5. Don’t Close Credit Card Accounts You No Don’t Use
If you must close credit card accounts, close newer ones. The age of your credit card accounts affects your score.
6. Pay On Maxed Out Cards First
Pay off accounts that are close to reaching their credit limits first. This will bring down your credit utilization score.
Typically, it can take up to 6 months of good credit behavior to see a change on your credit report. Be patient and persistent and you will be on your way to a better credit score.
Understanding credit can help you reach your financial goals.
Watch our video to learn about free credit reports!