Improving your credit score is something that takes time. I’ve been able to improve my credit score over 200 points within the last 3 years by following these steps.
Pay your monthly bills on time.
Yes, you have probably heard and read this over and over. For good reason, it WORKS!! One late payment on your credit report is looked at as negative and can knock quite a few points from your credit score. As soon as you get that bill in the mail, pay it. Better yet, sign up for automatic recurring payments if available.
If you are just starting out and have a skimpy credit report, consider opening 1 or 2 credit accounts. Don’t charge more than 25% of your credit limit. Of course, it is best to pay your balance in full every month. You don’t want to over do it, however; it is good to have a healthy mix of accounts that are in good standings to build your scores up.
Don’t get enticed! We see it everywhere.."No payments for 12 months!!", "0% interest for 6 months!". Stores are always trying to get consumers to apply for their credit cards. Don’t fall into that trap. Multiple inquiries on your credit report will definitely lower your credit score. It’s not worth to save 10% on your purchase with a Target card if that card is charging you a 20% APR, plus lowering your credit score. Stick with 2-3 solid accounts and take care of them.
Keep your balances low.
Lenders don’t want to see maxed out credit accounts. Try to keep your balance less than 25% if possible. If it is more than that, stop charging now and work on paying off the balance.
Negotiate a lower APR with your credit company.
If you have been a loyal customer for some time, call the customer service number on the back of your card and negotiate a lower APR. Chances are they will oblige, considering you have been making your payments on time. A lower APR will not only save you money, it will also make your monthly payments work harder towards your principal. Therefore, lowering your balance and getting that credit score up.
Check your credit reports.
Get a copy of all 3 credit reports from Transunion, Experian, and Equifax. Carefully go through each and every entry on your report. If there are discrepancies, dispute them. Once it is fixed, you will be mailed an updated report, look over and check for accuracy. This this over and over until your credit report if completely accurate.
Don’t close all your paid accounts.
It used to be a myth that it is best to close accounts that you aren’t using. This couldn’t be further from the truth. Length of credit history plays an important factor on your credit score. You really don’t want more than 5-6 inactive and open accounts. However, you want to keep the ones that you have had the longest. This will help you to be seen as more credit worthy.
Avoid debt consolidation and bankruptcy.
Obviously, bankruptcy will hurt your credit score. However, alot of people don’t realize that debt consolidation is harmful to your credit and credit score as well. Lenders look at debt consolidation as you not being able to manage your credit and money on your own. If you are overwhelmed with debt, you may be better off negotiating a debt settlement directly with your creditors.