Your credit score is an important part of your financial life, influencing everything from loan amounts to your ability to make big purchases. If your score is holding you back, it’s time to take action. Here are some practical tips to boost your credit score quickly and save money in the long run.
START BY CHECKING YOUR CREDIT REPORT
Your first step is to review your credit report for any errors or discrepancies that might be dragging down your score. You can get a free credit report annually from AnnualCreditReport.com, the only federally authorized site. While your score usually costs extra, some credit cards offer free monthly credit scores, or you can use services like Credit Sesame. Make sure to carefully review your report and correct any mistakes by disputing them.
PAY YOUR BILLS ON TIME
After checking your credit report, focus on paying your bills on time, which is crucial as late payments make up 35% of your credit score. If you struggle with timely payments, creating a budget can help ensure you don’t miss due dates, thereby improving your score.
REDUCE OUTSTANDING DEBTS
Next, tackle your outstanding debts, which also affect your score. Review all debts listed on your report and plan how to pay them off. Whether you use the snowball, avalanche, or another method depends on what works best for you. You could also try negotiating with creditors to reduce the amount owed or lower interest rates. It might not always work, but it’s worth a shot.
MANAGE YOUR CREDIT CARD WISELY
Credit cards play a major role in your credit score, accounting for 30% of it. Keep your credit utilization under 10%, but even staying under 30% can help. The age of your credit accounts matters too, so keep older cards open to extend your credit history and improve your score.
INCREASE YOUR CREDIT LIMIT
Every six months, consider asking your credit card company to increase your credit limit or lower your interest rate. Just make sure they don’t perform a hard inquiry, as this could hurt your score.
DIVERSIFY YOUR CREDIT ACCOUNTS
Lastly, having different types of credit accounts can positively influence your credit score, impacting about 10% of it. A mix of account types shows that you can manage various forms of credit responsibly.
IN SUMMARY
To boost your credit score, start by reviewing and correcting your credit report, pay all your bills on time, reduce outstanding debts, manage your credit cards carefully, expand your available credit, and diversify your account types. Following these steps can help you improve your credit score, enhance your purchasing power, and save money.