If you have been having problems paying bills or are considering gaining a new investment you may be worried about how to improve credit score. Many people don’t even bother checking their scores until they run into a denial of a loan or a raise in interest rates. Waiting until you are already in trouble can make nursing your credit score back to health much harder than necessary. Although we all wish that we could just keep our finances healthy in the first place it’s undeniably easier said than done. If you are looking to fix credit credit score because your score is looking bad or even if you are just cautious, follow these simple steps to achieve financial freedom.
01. Keep Accounts with Balances Open.
Delinquent accounts may sometimes hurt your score, but closing it may cause even more damage. When you choose to cancel a credit card with a balance, the max limit will be reverted to zero. Since you have an outstanding balance it will appear that you have maxed out your card! The amount of debt that you have figures up to 30% of your credit score, so these maxed out cards may have a detrimental effect. It’s also important not to close your only card since that lowers you overall available credit.
02. Pay your Bills on Time.
This may seem like a no-brainer. However, many people feel that after several years of faithfully paying bills that you can skip a couple when times become tough. Unfortunately being a good bill payer does not raise your credit score but being negligent and making late payments will definitely hurt it. Since this is not a two-way street scenario many people end up with long lasting scars on their credit reports. In fact, even after you have paid up on a collection account it will not be removed from your credit history for seven years! Keep that in mind when learning how to raise your credit score.
03. Apply for Credit Only as Needed.
A common mistake that credit-seekers make is opening several new accounts at once in order to create score raising variety. While having a good mix will generally help in the long term, opening several new accounts in a short period of time will make you appear very high risk to an investor. Manage the credit cards that you currently have in a responsible manner is vital to improve credit score over time. Older accounts add length to your credit history which can bump up your credit score significantly.
04. Be Aware of your Exact Score.
The difference between 689 and 700 can mean an extra $11,000 on a $165,000 thirty year fixed-rate mortgage. This kind of money is obviously nothing to mess around with considering how relatively easy it would have been to just raise your score by two tiny points. If your score is just hovering new a lender’s sweet spot simply wait until your average credit score is higher. Spend this time shopping around for the best rates. The wait will be worth it!
Never give up! Simply being above the national average credit score may make you feel pretty good about yourself, but you will feel better when you’re getting the best rates possible. With responsible financial habits and keeping these ‘how to improve credit score’ advice in mind, it shouldn’t be difficult to obtain a great credit score and keep it there. Of course, if you are already at 760 or above you probably already qualify for the best rates around so make that a good goal to shoot for. Good luck and happy credit-building!
