How to Improve Your Credit Score

Improving your score might seem like an impossible task but there are always ways to getting better. Even if you’ve had a rough start with your accounts we can always make positive changes to improve your quality of life. These days, credit is needed for everything and although you can usually work around it, it comes at a high cost. Here are some small steps to getting you to the right direction of improving your score.

The first obvious factor is paying your bills on time. Delinquent payments and collections can have a major negative impact on a credit score. Keep balances low on credit cards and other “revolving credit.” High outstanding debt can affect a credit score. Apply for and open new credit accounts only as needed. Don’t open accounts just to have a better credit mix. It probably won’t improve your credit score. Pay off debt rather than moving it around. Also, don’t close unused cards as a short-term strategy to improve your credit score. Owing the same amount but having fewer open accounts may lower your credit score.

Payment History makes up 35% of your score and is crucial to whether you have good or bad credit.  When lenders review your credit report and request a credit score for you, they’re very interested in how reliably you pay your bills. That’s because past payment performance is usually considered a good predictor of future performance. You can positively influence this credit scoring factor by paying all your bills on time as agreed every month. Paying late or settling an account for less than what you originally agreed to pay can negatively affect credit scores. You’ll want to pay all bills on time  not just credit card bills or any loans you may have, such as auto loans or student loans, but also your rent, utilities, phone bill, etc. If you’re behind on any payments, bring them current as soon as possible.

Credit Utilization is another important number in credit score calculations. Lenders like to see low ratios of 30% or less, and people with the best credit scores often have very low credit utilization ratios. A low credit utilization ratio tells lenders you haven’t maxed out your credit cards, and likely know how to manage credit well. You can positively influence your credit utilization ratio by paying off debt and keeping credit card balances low.

Paying your bills on time is the most important contributor to a good credit score. Even if the debt you owe is a small amount, it is crucial that you make payments on time. You’re on your way to improving your score and minimizing your outstanding debt will help you do that! You should also avoid overextending yourself and refrain from applying for credit just to apply.

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*Individual results may vary. Please call for more details and to discuss your own individual situation.

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