Here are just six simple ways to boost your credit score quickly and easily!
It can be hard to manage your credit score if you don’t have the right tools in place, but it’s easier than you think to build your credit and improve your credit score.
1. Check Your Credit Report For Errors
The easiest and most cost-effective way to boost your credit score is by taking a look at your credit report. Because all three of the major credit bureaus (Equifax, Experian, and TransUnion) are now required by law to offer free copies of your report every 12 months (go get yours now), you have a great opportunity each year to ensure that your information is being reported accurately. It’s not uncommon for people to find mistakes on their reports; sometimes these errors can be addressed quickly and corrected, thereby boosting your score as soon as next month. If you need help, many nonprofit organizations will offer free advice and even representation in disputes over incorrect items on your report.
2. Keep Track Of Your Finances
Whether you’re trying to boost your credit score or figure out how you’re going to save for retirement, keeping track of your finances is an important step toward meeting those goals. The best way to stay organized is with a budget, but that doesn’t mean it has to be complicated. Start by creating a basic monthly budget and including columns for income and expenses so you can keep track of what you spend each month. If you want more detailed tracking, set up a spreadsheet and divide it into categories like housing, transportation, food, and entertainment. Set aside time once or twice a week when all bills are paid and payments have been made so you can stay current on where your money is going.
3. Pay All Bills On Time
Paying your bills on time is an important first step in boosting your credit score. If you’re late on payments, collection agencies may report delinquencies that drag down your credit score for years. The goal should be to have all of your bills paid off in as little time as possible, which will save you money on interest charges and boost your credit score at a steady pace.
In addition, paying bills on time can help prevent identity theft by making sure no debts are incurred under your name.
4. Reduce Debt To Improve Your Ratio
One easy way to boost your credit score is by avoiding opening new lines of credit. This includes new credit cards and stores charge accounts. Of course, if you only have one or two lines of credit, you’re probably wondering what would happen if you did open a new account. Would it be all that big of a deal? The answer is yes: each time you open a new line, your score takes a small dip, then starts climbing again once your current bills are paid on time for at least six months straight. Opening another line of credit could mean lowering your overall score by as much as 20 points in six months and 30 points in one year!
5. Avoid Opening New Lines Of Credit
If you’re looking for a way to boost your credit score, it’s important not to open too many new lines of credit. Excessive credit utilization has a big impact on your score, so opening any new lines of credit will hurt rather than help if it bumps you above 100% utilization. If you’re planning on applying for a loan or mortgage soon, apply for them now and close those accounts before your credit report is pulled by a lender. Otherwise, focus on using cash or debit when possible instead of pulling out a credit card; that way you can keep payments low and avoid paying interest (which counts against your score).
6. Monitor Utilization Ratio
If you’re looking to boost your credit score, one of your best tools is something called a utilization ratio. This is just a fancy way of saying how much you owe versus how much credit you have. For example, if you owe $8,000 on a credit card with a $10,000 limit and that’s all you use in terms of available credit—your utilization ratio is 80%. While there’s no specific number that gives lenders comfort (like most things related to finance), higher numbers are generally better. It may take several months or longer for an increase in one area to impact your overall score. In other words, don’t expect an increase immediately after making payments and adding new accounts. Be patient but be diligent!