Improving your credit score is a noble goal. It impacts many aspects of your financial success and helps you maintain healthy financial habits. Improving your credit score is possible, no matter how long or short it takes. Below are several tips to put you on the path to an excellent credit score.
Why Improving Your Credit Score Matters
A good credit score will open the door for many great financial opportunities. Banks, lenders, etc., will compete for your business by offering lower rates and perks because they see you as a low-risk borrower, someone who will not be likely to make them lose money. With a bad credit score, banks and lenders will be wary of doing business with you and can take advantage of you with criminally high rates. Keeping a healthy credit score allows you to pay less.
Get Your Credit Report
One practical first step in improving your credit score is to get your credit report. You can get a report from any or all of the following bureaus: Experian, TransUnion, and Equifax. When you review your credit reports, you can better understand your credit history and know exactly what was lacking.
Know the Highlights
Know why your credit score is low, but also know what was good about it. For example, if you paid off a loan, you want to keep that on your credit history. Knowing the good points of your credit history can help you with future financial decisions.
Avoid Late Payments
The biggest cause of low credit scores is late payments. If this is the case, then ensuring on-time payments is of utmost importance. One way to begin is to set a date to pay off the credit in full once a month, such as the first of the month.
Pay in Full Each Month
It is a myth that it is okay or even beneficial to pay only the minimum amount on your balance. Paying in full on time is the best way to keep on top of your finances and improve your credit score. Paying in full will also improve your credit utilization.
Limit Your Credit Utilization
Your credit utilization is the percentage of your available credit that you use each month. Limiting your credit utilization to 10-30% each month will help improve your credit score. Another method to help with that is to keep your total outstanding balance at 30% or less per month.
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