“How can I improve my credit score?”
It’s a question every one of us have asked ourselves at some point. Whether you’re dealing with credit cards, looking to make major purchases, or even considering buying a home, no one is immune to this particular curiosity. With a little bit of patience and consistency, the following five steps will have adjectives like, “good,” and “excellent,” appearing on your credit report before you know it.
Step One: Always Pay Your Bills on Time
This one seems like a no-brainer, but the simple act of continuously showing your creditors that you are reliable is crucial. Keep in mind that neglecting even the little bills can have a potentially disastrous effect on your score. Don’t miss the opportunity to buy your dream house because you forgot to pay that old department store card!
Step Two: Keep an Eye on the Overall Balances
One of the major factors in determining your credit score is how much revolving credit you have, versus how much you are actually using. Keep the debt-to-credit ratio to 30% or lower, pay down balances and watch as your score steadily climbs.
Step Three: Avoid the “Little Guy” Balances
These are the small balances you’ve got out on a number of different cards. Many people think that using multiple cards helps build credit, but in reality one of the factors that determines credit score is just how many cards are carrying balances. Pay off these guys and stick with one or two go-to cards to do the heavy lifting (preferably cards with a low interest rates).
Step Four: Hang Onto Your Old Debt
This step is being rewritten, work in progress.
Step Five: Don’t Panic
Trying to improve your credit score takes time, and unfortunately, these days that seems to be the one thing we seem to have less and less of! Use the credit you have accrued responsibly, and take care of the little things that will keep your score on the rise. Also be sure to check on your credit, but don’t obsess over it: if you check one of the three reports every four months, chances are you can do it for free!