Discover tips to increase your credit score

Tips to Increase Your Credit Score

We know how credit scores can seem like a big deal, especially when we’re trying to increase our credit limit or even buy something more expensive, like a car or a house.

If you’re here because you want to know how to improve your score and thus have access to better financial conditions, you’ve come to the right place! In this article, we’ll give you some practical tips on how to boost your score. Get ready!

Pay your bills on time

It may seem obvious, but this tip is fundamental. On-time payments represent a significant part of your credit score. This is what the credit agencies call “payment history”.

If you are often late with your payments, your score will suffer. So set yourself a budget to ensure that you always pay your bills on time. If you need to, set alerts on your cell phone or use apps like Mint to manage your finances.

Keep your credit card balance below 30% of the limit

Experts recommend that your credit card balance should not exceed 30% of the limit. This is because the level of credit utilization (how much of your limit you are using) is one of the most important factors in your score.

When you use a large part of your limit, your score can drop, as this can be interpreted as a sign of risk.
For example, if you have a limit of $1,000, ideally you shouldn’t let your debt exceed $300. If you’re over it, try to pay off the balance as quickly as possible to reduce this percentage and improve your score.

Don’t close old credit cards

Many people think that in order to improve their credit score, they need to close those old cards they no longer use. But actually, keeping an old credit card open is beneficial to your score. This is because the length of your credit history counts for points. So if you have an old card but don’t pay high maintenance fees, leave it there, even if you don’t use it much.

Of course, if the card has a very high interest rate or expensive annual fees, then you might want to reconsider, but in general, keeping a long credit history is an advantage.

Diversify your sources of credit

Having different types of credit, such as a credit card, a personal loan or a mortgage, can help increase your score, as long as you know how to manage these debts well. This shows creditors that you can handle different forms of credit without getting bogged down.

However, be careful not to take on more than you can afford. Having a large amount of credit available without knowing how to use it can be a mistake, especially if you end up in debt.

Monitor your credit report regularly

It’s very important to check your credit report from time to time to make sure there are no errors or outdated information. If you find something wrong, it’s essential to dispute it in order to correct it.

Every 12 months, you are entitled to access your credit report free of charge. The official website where you can do this is Annual Credit Report, which offers access to reports from all the major credit agencies in the United States.
This helps you avoid surprises and correct any erroneous data that may be negatively impacting your score.

Consider using a loan to build credit

If you are still starting to build your credit score or if you have a low score, it may be useful to consider a small loan or even a “credit building loan”.

This can be a good way to start building a positive credit history. Remember to make your payments on time, so that this will help boost your score rather than harm it.

Be patient

Finally, remember that raising your credit score doesn’t happen overnight. It takes time, and the most important thing is to be consistent. Over time, good payment habits and careful use of credit will make your score rise naturally.

With these tips, you’re well on your way to improving your credit score and thus achieving a healthier financial life.

But remember: the key to all this is consistency and planning. If you follow these tips, your credit will take off and you’ll have more opportunities ahead of you. Good luck!

Written by

Juliana Raquel