How To Improve Your Credit Score Even When It’s Already Good
Ever Wonder How To Improve Your Credit Score?
Do you feel like you have a pretty good credit score, but wish it were higher? Or maybe you’ve made a few mistakes in the past with paying off balances in time, and want to increase your rating to make up for it. These things take time and diligence, as raising your credit rating is not something that can be done as a ‘quick fix’. Even though it might have just taken a few late payments to bring your score down, it will take some work to bring it up high. However, here are things that you can show you how to improve your credit score.
One of the most important things to do is to make your payments on time. This may seem like common sense, but making your payments on time, every time, is the quickest way to increase your rating. Even if you are not paying the balance in full each month, not missing a payment will always help you. There are numerous ways to ensure you pay your bills on time, if you are the type of person who struggles with this. Set a reminder in your calendar (or write in down if you are using a day planner) a few days before the bill is due to be paid. Set it up as a recurring reminder and you don’t have to worry about remembering when the bill is usually due. Another way to ensure your bills are always paid on time is to pay all (or at least the minimum payment) as soon as it comes into your hands. Don’t wait until the day before to pay it, and risk forgetting about it and paying late. Even if your bill comes 2 weeks before it due date, by paying the minimum balance as soon as you lay eyes on it you have ensured it will be on time. You can pay more on it as soon as your next paycheck comes.
Get a copy of your credit score and look it over for any mistakes, and to get an idea of where your rating is at currently. You are entitled to a free copy of your credit score once each year from AnnualCreditReport.com, and there are three credit bureaus you can get them from (Equifax, Experian and TransUnion). Apply for a copy from one of the bureaus every 4 months, and you will be able to have a look at your score for free all year. This will help you monitor small changes that increase your score, and also keep on top of errors right away if they happen.
Don’t be too hasty about cancelling credit cards that you have paid off, in the belief that this will help raise your score. The amount of credit you have (and have successfully paid off) can work in your favour long after you’ve stopped using the card. Your score is an aggregate of how you’ve used your cards in the past, so if you have paid off a credit card, that good activity will count for you for up to 7 years. That’s the kind of activity that you want to be used for your score, so if you were to cancel this card all that hard work would be lost. Instead, keep it around for emergencies, or for small purchases you know you can pay off in time. It also helps to keep your credit balance at a good amount – it is better to have available credit than just enough. For example, if you had just one credit card with a $3,000 limit and you racked up an average of $2,500 per month on that card, even if you pay off the balance in full each time you are at the upper limit of your spending and could be considered ‘risky’ – which is something to avoid. With another $1,000 limit card, even if you don’t use it, your available credit each month is $4,000, and this makes your amount of risk look more reasonable.
With that being said, the best solution to become less risky is not to run out and apply for a bunch more credit cards in the hopes of increasing your available credit. Applying for many cards in a short period of time can again make you look risky, and this is what you want to avoid. Acquire new cards only as you need them, and keep in mind that you want to have more available credit that you spend each month. In fact, 30% is a good number to keep in mind – you want to be charging only about 30% of your available balance on average every month. If you routinely spend $2,000 on your cards, aim for approximately $6,500 in credit available to you. If you don’t want to open another card, consider calling your current company and asking to have a credit card limit raised.
Continue to build your credit history responsibly. If you are just starting with a credit card, congratulations. You are making the right choices by being informed about how to build and maintain a high credit score. This information will come in handy later, when you need to get additional credit or loans in the form of a mortgage or a line of credit. And if you have had a credit history for a while with a bit of a checkered past, you are still on the right track by knowing what you need to do to raise your score to where you want it to be.
There are numerous ways to increase your credit score, and to fix small mistakes that you may have made in the past – late payments; missed payments; maxing out your cards. Paying your cards off, and keeping tabs on your credit score are the best ways to manage it, although there are a few more options here. Just keep in mind that this is not usually a fast process, and don’t be fooled by any company that claims to be able to erase bad credit for a fee. Work at this for yourself, and with diligence you will see the results you wish for.