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Top Ways To Improve Your Credit Score

By Edited Nov 13, 2013 0 0

Your credit score impacts so many aspects of your life that it could possibly be the most important set of numbers of all time. 20 years ago, your credit score primarily affected your ability to get new credit cards, vehicle loans, and home loans. Today, even employers will do a credit check on you before you get hired and it's quite possible you won't get a job because your credit score disqualifies you. The best thing to do is not mess up your credit score in the first place but for a lot of us, this just isn't an option. If you have a bad credit score, it's never too soon to start improving it. Here's how:

Get Your Credit Report

You want to make sure you know your current credit score so you will have to get a report. This will usually cost around $30 but could be more or less if you use a service that gets you all three at once. Be careful of sites offering free credit reports because some of them have a hidden service agreement that will charge your bank account or credit card every month. Then you get mad, stop paying them, and guess what? Your credit score just got lowered again. Some sites are perfectly fine but make sure to read the fine print.

Make Sure Your Report Is Correct

It's not uncommon for credit reporting agencies to make mistakes. Go over your entire report thoroughly and look for anything that may be out of place or you know shouldn't be on there. If you see some strange charges that you didn't notice on your monthly statements, call the credit card company that gave you the card and request more information. It's not uncommon for mistakes to be made or small cases of identity theft to occur without your knowledge.

If Your Bills Get Behind, Make Arrangements.

This is a simple one that people will simply overlook or they miss their chance for it. If you are behind on any bills, you can almost always set up some kind of payment arrangement that won't affect your credit rating at all. You have to stick to the arrangement you have made though. If you deviate from that arrangement or try to stall it more than it already is, you may end up with no cable, no power, or a credit card bill sent right to collection agents. This just takes one phone call to set up and most companies are more than happy to work with you.

Keep Your Balances Low

Spending a decent amount with your credit card can look good on a credit report but there is a cut off for that. Studies show that going over 35% of your total limit doesn't improve your score any better than 35% exactly. It doesn't matter if you max it and pay it off within one week. 35 seems to be the magic number. This means if you have a 1000 limit, try to keep the balance around $350 at the most.

Keep Your Old Accounts Open

The length of time you've had accounts in an important factor that counts against your overall credit score. Even if you don't plan on using a credit card again, keep it open and buy something once every few months so it stays active. The longer these accounts are open, the better your score looks. Just pay off your old card charges right away. Fill up your gas tank then immediately send the money to pay it back down to 0.

Don't Apply For A Lot Of Credit Lines

Most people don't realize that every time you apply for a credit line somewhere, that application is sent to a credit reporting agency and stays on your record for a couple of years. This actually lowers your credit score a little bit so if you apply for a Target, Sears, Wal-Mart and Best Buy card in the same month, you are giving your credit score a painful kick that will lower it drastically. Only apply for credit cards (even retail cards) if you absolutely need them.

Don't Consolidate Your Cards

As tempting as it is to only have one bill at a time, this actually hurts your credit score quite a bit. If it will save you a lot of money, you should probably do it anyway but keep in mind your score will be lowered by this. You'd think something like this would actually improve your score as you are taking measures to improve it but it does lower it significantly.

Shop Around

Don't get the brand new Visa with pictures of cats jumping around in 3D that has a much higher interest rate than a plain looking card and don't jump into a new credit card without doing your research. If you aren't paying attention you could get a strange 3rd party card that charges an insane amount of interest. Make sure it's as low as it possibly can be and still have the limits that you need.

Raising your credit score is extremely important and it's never too late to start fixing it if you've made some mistakes in the past. If you are a young adult, slow down your spending and make a significant effort to improve your score. You don't want to go in to buy a car only to find out your credit is so bad you will be lucky to find a used car lot to sell you a 20 year old junker. For those a little older, home ownership might be in the future and you want to make sure nothing will stand in your way.

Another option is to find an office in your area or online that specializes in repairing your credit. Many of these are free but will require you to pay for your own copies of your reports. Debt is such a growing problem around the world that more and more free services are becoming available all the time to help people handle debt as well as credit.


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