How to Improve your Credit Score: 6 Simple Steps

Knowing how to improve your credit score is important because your credit score is what determines your creditworthiness. The higher your credit score, the better chances you have of securing loans. Your credit score plays a big role; it influences different aspects of your life.

It determines if a lender should offer you a loan. However, it also determines the interest rate you will pay on loans, and at times, it also determines if you will get the apartment that you want.

Your Interest: What is a Good Credit Score?

When do you need to improve your Credit Score?

Some people do not know when to improve their credit scores. However, it is very important to improve your credit score when you have a low score or a fair score.

This is because improving your credit score gives you a better chance of securing loans. Creditors have their standards for what a good credit score is.

But on a general note, scores between 690 and 719 are seen as Good Credit Scores. Credit scores above 720 are considered excellent, and scores between the range of 630 and 689 are seen as fair.

Credit scores below 630 are seen as bad credit scores. With these ratings, you should know when you need to improve your credit score.

Why do you need to Improve your Credit Score?

Improving your credit score is important. Below are some reasons why you need to improve your credit score.

• A good credit score can give you access to credit products at a lower interest rate.
• If you do not have an emergency fund or you run out of it, a good credit score gives you the ability to open new credit to cover expenses in a crisis.
• It gives you a mortgage with a good interest rate.
• A good credit score can get you a desirable car loan or lease.
• It can also get you an unsecured credit card with a good interest rate.
• Some landlords also use a credit score to screen their potential tenants. So, you must have a good credit score even if you do not plan to apply for credit.
• Having a good credit score implies that you are less likely to fall behind on a bill.

These and many more are the reasons you need to increase your credit score.

Here are the things you need to do to Improve your Credit Score

After knowing why, you need to improve your credit score, your next move should be on increasing your credit score. There are a lot of ways to improve your credit score, they are listed below.

1. Paying Bills on Time

To increase your credit score, you need to pay all your bills on time. You have to make sure you don’t miss any payments. To do this, you can set up automatic payment for the minimum amount due.

2. Keep your Credit Account Open

You have to keep your credit accounts open unless you have a good reason to close them. Keeping your credit card active will help boost your credit score.

Please make use of it for a small purchase, make sure all charge on your card is small, and make it your primary card for your online shopping account.

3. Avoid making Different Credit Applications in a Short Time

Research has shown that applying for too many credits can cost you a low credit score. A user should apply for less credit; lesser credit is easier to build than having a lot of credit.

Note; the worthiness of your credit score is determined by the usage and a lot more.

4. Monitoring Your Credit Reports

One key factor for improving your credit score is monitoring your credit reports and disputing information that you believe is incorrect or you think is too old to be included.

Note that most negative information falls after seven years.

5. Review your Credit Report

You need to review your credit report and check for errors on your report, and then report any mistake you find. This is very important as it can affect your credit scores.

6. Ask for Higher Credit Limits

You can request higher credit online, from credit card issuers. Doing so won’t hurt your credit score; in fact, you would or might help end up improving your credit score faster.

Listed above are vital ways of improving your credit score, but more importantly note that to improve your credit faster, you need to pay your bills on time and use your credit card wisely.

Your Interest: How to Check Your Credit Score

What to do to Increase and avoid your Credit Score from Depreciating

After improving your credit score, you need to keep it healthy so it does not depreciate.  And to keep your credit score healthy, you need to limit your credit applications.

Frequently applying for credit in a short frame of time does not speak well of you as it may give the lenders the notion that you are too dependent on credit.

So, it is advisable to space out your credit applications, for instance, you can apply for credits once in three months.

Also, you must borrow only what you can afford, because having too much debt may lead to bankruptcy and it will stay on your credit report for a minimum of six years, thereby affecting your credit score.