If you feel disappointed by your most recent credit score, it’s important to remember that all’s not lost. Even if your credit report shows your score below the “good” range, you can still improve it with a few tried-and-tested tips.
These solutions are not hard to implement. But they still hold a lot of weight in terms of improving your credit score. This can slowly lead you towards enjoying all the perks of a high credit score, including but not limited to friendlier interest rates and easier loan terms.
To assist you through this journey of financial stability, here are a few dos and don’ts of credit score improvement.
Do Make Payments on Time
Improving your credit score is similar to navigating a debt management plan: In both cases, you need to make timely payments to achieve your goals. In terms of credit score, making your payments on time has the largest effect on its improvement. This makes it the easiest but most effective way to level up your credit score in the long run.
Don’t Apply For Unnecessary Credit
When you are already struggling with a bad credit score, chasing after new credit can invite more trouble your way. It’s because when you apply for additional credit like loans or credit cards, lenders do a hard inquiry into your credit that affects your credit score. You can learn how to freeze your credit to stay away from new credit applications.
Do Have a Good Credit Mix
While getting new credit is a big no, you should see if you have a good credit mix by your side. This credit mix typically comprises at least one installment loan and one credit card or line of credit. Similar to a portfolio tracker for investments, this showcases your responsibility with handling different types of credit products.
Don’t Exhaust Your Credit Limit
If you have used up a majority of your credit limit, it’s time that you work towards paying off your balances. It’s because a debt utilization ratio of above 30% can negatively influence your credit score. You may also look for special products like student credit cards that suit your needs, save you from high annual fees, and keep unnecessary interest at bay.
Do Pay Off Your Entire Revolving Credit
Similar to keeping your debt utilization low, you should also pay off your revolving credit balances like credit cards and lines of credit in full. This small practice can significantly improve your credit score. If you find it to be difficult, you can take help from solutions like a budgeting app that helps you manage your expenses according to your needs.
Don’t Be Afraid to Dispute Reported Errors
Sometimes, collection agencies report overdue payments in error. If you do not dispute them, they can bring down your credit score and stay on your credit report for years. This makes it a good practice to request your credit report every few months and check for any misreported errors. You can use a planner app to remind yourself of this practice.
Do Add Your Bill Payments to Your Credit
Similar to how people add the benefits of investor loans to augment their businesses, you can add bill payments like utilities and rent to your credit report to improve your credit. You may need to register with credit reporting agencies who specialize in these services, but that is a pretty easy step. All in all, this small practice can deliver real results.
Don’t Forget to Track Your Credit Score
If you keep performing these steps but do not check how they are affecting your credit score, you may not know how to improve your strategy. This is why it’s imperative that you keep looking into your credit score regularly to determine how these changes influence it. This can help you go a long way towards improving your credit.
With these dos and don’ts of credit improvement, you can elevate your score in due time. This can help you secure loans, increase your credit, and fulfill all your plans that need financial support.