Important Steps for Increasing Your Credit Score

Your credit score is a reflection of your credit behavior over a long time. If it’s really bad, improving it will require you to have great financial discipline. However, improving it is not an impossible feat. In this article, we give you tips to achieve this goal.

Pay Off Your Credit Card Debt

Your credit card balance is arrived at by considering the debt you own, the number of credit cards that you have that have an outstanding balance, and the amount of credit you have used. Total credit debt will be compared to the credit you have available to get an idea of your debt to credit ratio. In case the numbers of this ratio are very close to each other, this negatively affects your credit score.

Paying off your credit card debt is a good way of improving your debt to credit ratio and credit score. There are a number of ways that you can improve your credit card balances including:

• Pay all the credit balances in the various cards you have rather than moving the debt around and then use one or two cards for your purchases
• Ensure you do not open new credit cards in an attempt to increase your score
• Keep your unused or paid credit cards balances open as closing them removes your good repayment record from your score

Pay Your Bills Promptly and Fully

Your payment history is one of the factors that greatly affect your credit score. According to Fico.com, this history accounts for 35% of your credit score. If in the past you had missed payments, or you know you always pay your bills late you need to change this. Paying your bill on time and in full will improve your credit scores. Below are a few tips that can use to help you pay your bills on time and in full:

• Have payment reminders from your bank or credit card providers
• Use your credit card to buy what you can afford
• Even if you are looking to make a major purchase such as a home, look for a mortgage specialist who will help you manage your finances
• If you are in financial problems, seek the help of a credit counselor or make your creditors aware so that you can work out a means of managing your credit

Use Credit and Keep Your Utilization Rate Low

If you have a non-existence credit score, you might need to get a credit or debit card to improve your score. According to CNBC Bank, a credit score is very important since it determines the interest rate you will pay when you need a loan or a mortgage. While making cash payments is a good thing, it will not improve your credit score. If you have an in-active credit card start, using it rather than getting a new one. A longer credit history from your old card might be better than a shorter history from a new card.

In addition, manage your credit card balance by keeping the utilization rate low. This rate helps determine your credit score. A lower utilization score means a better score. Aim not to exceed 30% of your credit card limit.

Make small purchases monthly to increase your credit score steadily. Additionally, ask for a credit report to keep track of your spending and to note any errors in your credit card that might negatively affect your credit score.

In conclusion, improving your credit score might take some time and financial discipline on your part. The above guidelines can help you consistently improve your credit score.