8 Practical Ways to Boost Your Credit Score

Credit score can be an indicator of overall financial stability. Having a good credit score can help you acquire a loan with favorable terms, decrease life insurance interest rates, and even save money on utilities.

BOOST YOUR CREDIT SCORE

1. OPEN A CREDIT CARD, IF YOU DON’T HAVE ONE YET

Build credit history by opening up a credit card and using it responsibly. Keep your credit card use in check, and make on-time payments each month. It will do wonders for your overall credit score.

2. PAY YOUR BILLS ON TIME

Payment history has a big impact on credit score. Lenders typically won’t lend money to borrowers with a poor history of payments. Delinquent payments can drag your credit score down by as much as 300 points.

3. CHECK YOUR ANNUAL CREDIT REPORTS

Most Americans neglect checking their credit reports. This is an important habit to develop. Checking your credit reports allows you to assess your credit history so that you can check for discrepancies and fraud.

4. UNDERSTAND YOUR CREDIT RISKS

Educate yourself about your credit risks. Keep in mind that anyone can be a victim of fraud, so check your credit reports for signs of identity theft. As soon as you notice any inaccuracies on your report, get them cleared up as soon as possible.

5. RESIST THE URGE TO OPEN UNNECESSARY CREDIT ACCOUNTS

While one or two credit cards can be helpful to building a good credit score, opening multiple unnecessary credit cards does just the opposite. When you have multiple credit cards, it’s a lot more tempting to make impulsive purchases and accumulate debt that can seriously hurt your credit score.

6. DON’T SPEND BEYOND YOUR CREDIT LIMIT

Keep your credit card balances low, and don’t go over your credit limit. When you apply for a new credit, lenders often look into your credit utilization ratio. Calculate your credit utilization ratio by dividing your overall credit card balances by your overall credit limit. Having a low credit utilization ratio means you have not maxed out or exceeded your credit limit. The key is to have a high credit limit and low credit balance.

7. MANAGE DEBT

If you have an existing student loan, medical bills, or other types of debt - work on minimizing your outstanding debt. Develop a plan to get any existing debt paid off as soon as possible. The less debt you have, the better off you’ll be.

8. TAKE CARE OF YOUR LATE PAYMENTS

Instead of transferring your debts repeatedly to new accounts, take care of them right away. Contact your creditors to negotiate ways to be debt free faster and with lower interest rates if possible.

Rebuilding a negative credit score can take time. Hard credit inquiries from opening up new lines of credit can stay for two years. Late payments and delinquencies can stay on your record for up to seven years. Bankruptcies can also stay on your report for up to 10 years.

While building a good credit score won’t happen overnight, having a bad credit score could haunt you forever. Take charge of your credit score, and deal with your debt as soon as you can. Find the best credit repair plan that will work for you. Keep yourself educated regarding your accounts and credit scores. Lastly, be sure to handle your finances responsibly to improve your financial health.

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