If there’s one important financial advice that will get you ahead, it’s knowing how to keep your credit score within acceptable levels. It’s essential for everyone to increase their credit score when it has reached a lower-than-average point.
It all comes down to the decisions you make and the available methods you can use. On that note, here are a few things you might want to remember when you’re looking to increase your credit score and open up new financial opportunities.
1. Review your credit report
Reviewing your credit standing is crucial to knowing what steps you can take to improve your credit score if it needs improvement at all. You can check your credit report through your financial statements and other documents provided by your credit card company.
The report can also be obtained from credit institutions such as FICO There’s also a credit checking service you can use on a monthly subscription. No matter what method you use, check your credit history for information you may deem incorrect or outdated. You can dispute these with a credit reporting company like Experian or Equifax and get your credit record corrected.
2. Pay bills on time
Your credit score is largely dependent on your financial situation, particularly your ability to pay your dues on time. If you’re paying for your mortgage and shouldering your student loan balance, it’s necessary to make repayments before your due date. Delayed payments reflect badly on your credit standing in addition to having to pay hefty penalties.
Consider setting up payment reminders on your smartphone or paying more than the minimum amount on your loans. This tells credit companies that you’re financially stable and, in turn, deserving of better loan deals in the future.
3. Avoid getting a new credit card
You may find a good reason to apply for a new credit card like wanting to pay less in interest. However, doing so comes with a big risk to your credit standing. Since you’re technically applying for a new line of credit, the company issuing the credit card will do a hard inquiry on your past credit history.
This will result in a reduction in your credit score that may last for two years. It gets worse if you frequently apply for new loans or credit cards. You may want to wait until your credit record improves before getting a new line of credit. If you don’t want to wait too long, consider getting a tradeline from a legitimate provider. In that case, check out this Tradeline Supply company review and find out if it’s a good choice.
4. Maintain a healthy credit utilization ratio
When it comes to managing your credit standing, your credit utilization ratio is the only metric that matters. This shows how much money you owe divided by the amount of money you are allowed to borrow from each of your credit cards.
A good rule is to keep this ratio to 30% and avoid maxing it out which will damage your credit score and disqualify your future loan and mortgage applications. To ensure it remains low, consider diversifying your credit portfolio by applying for new cards. A good credit mix allows you to increase your total credit limit and keep your revolving monthly credit utilization low. Then again, make sure you have a healthy credit standing before you apply for a new card so as not to risk the effects of a hard inquiry.
Endnote
Having a healthy credit score can help fuel your personal and professional goals. You just have to make the right choices in making sure it stays within favorable levels.
