Your credit score is more than just a mere number, it’s a determination of the types of loans and interest rates you will receive. Having a higher credit score makes it easier to secure loans with low interest rates. Most people don’t realize that there are things you can do to control your own credit score. Read on to discover 9 easy ways to boost your credit score.
1. Pay Your Bills On Time
Prompt payment accounts for about 65% of your credit score. Even if you make no other changes, just paying your bills on or before the due date can significantly improve your credit. Use a calendar and mark when each bill is due to make sure they are all paid on time.
2. Credit Availability
Keep a significant portion of your credit available. You should only borrow a maximum of 35% of your available credit. Once you get above that limit, lenders get weary and may not want to grant you new loans. If you’re trying to buy a house or make another major purchase, the goal is 10% or less.
3. Resist Closing Old Accounts
Even if you don’t use a credit card anymore, it’s not smart to close the old account. Old accounts, even ones you don’t use, contribute to your available credit, which lowers the credit to debt ratio and makes you more attractive to lenders.
4. Review Credit Limits On Your Report
Check to make sure lenders are reporting your credit accurately. Particularly, be sure that lenders are reporting your limits accurately. If you owe $2,400 and your limit is being reported as $2,500, that’s going to really hurt your credit score. If your real limit is $5,000 then your score should go up when this mistake is fixed. A neat trick to boost your credit score is to contact your credit card company and ask them to raise your credit limit. If they agree, your score will automatically go up because of your improved debt to credit ratio.
5. Pay Down Your Debt
Work to pay off your worst types of debt first. No-money-down debts are some of the worst kind, so paying those off as soon as possible is a good idea. You can use a home equity loan to pay the debts off, as that type of loan is less damaging than a no-money-down loan. Of course, if you’re struggling to pay your no-money-down loan, risking your house to relieve bad debt is never a good idea.
6. Negotiate Debts
Deal with overdue accounts in a manner that will do the least amount of damage to your credit. Paying off debts that have been sent to collections doesn’t tend to improve your score much because of their designation on your credit score. To fix this problem, try negotiating with the credit card company in writing to have them list your account as “paid as agreed”, which won’t be as damaging. Of course having no notation is the preferred choice. You can negotiate in other ways too. Contact your credit card company and ask them to lower your rate. If they do, you can get your debt paid off sooner. If you have an old debt with $500 owed, you may also negotiate with that company to get it removed from your report if you pay a portion of it.
7. Don’t Request Loans
Requesting a loan can trigger what’s known as a hard inquiry on your credit. Having too many hard inquiries over a short period of time can be damaging, so watch the number of inquiries made in a short period of time and make sure you don’t accidentally cause damage to your score.
8. Review Your Report
Review your credit report with a fine tooth comb. Consumer watchdog groups have reported that up to 80% of credit reports contain an error. Those errors could be damaging your credit score. It’s a good idea to review your credit report on an annual basis to make sure there aren’t any errors. If there are any errors, make sure to contact them to get it fixed.
9. Do Nothing
In order to keep your credit in good standing, don’t mess up. Sometimes, improving your score is as easy as giving it time and doing nothing at all. If you’re on the right track, keep doing what you’re doing. Pay your bills on time, keep track of your credit report and make sure that you don’t do anything to damage your score. Good credit is hard to get, so once you reach your goals, don’t do anything to set yourself back.