How Can I Improve My Credit Score?
Understanding credit and credit scores can be downright confusing and yet that 3-digit number has a great deal of influence over your daily life. Your credit score affects your access to cash, credit cards, and how much interest you pay when borrowing and if your credit score is less than spectacular it can also have a negative impact on your ability to rent an apartment or even land your dream job. You can improve your credit in order to reduce your rates and increase your chances of being approved for all of your purchases but you can’t do it overnight. Just like it took many years to damage your credit it also takes time to rebuild it and you can find three easy ways to improve your credit score right here below.
What are 3 Easy Ways to Improve My Credit Score?
Pay Your Bills On Time
This is the simplest and most obvious way to improve your credit score but not all financial situations are the same. If you have gotten in over your head with monthly bills you can try to have your monthly payments reduced or get high balance bills on a more affordable payment plan. Creditors are more likely to work with you if you make an effort to negotiate a repayment schedule that works for both parties. 35% of your overall credit score is determined by payment history.
Reduce Your Credit Usage
Using a credit card for daily expenses is not a detriment to your credit rating as long as you pay off the balance in full each month. If paying off the entire balance is not possible for you then pay off as much as you can because this will reduce the amount of interest charged and ultimately lower credit card bills quicker. Keeping a credit utilization ratio at or below 30% will quickly help restore your credit score. Your credit utilization ratio is determined by dividing your total available credit by the amount you owe. Credit utilization represents 30% of your overall credit score.
Don’t Close Existing Accounts & Don’t Open Unnecessary New Accounts
We all have been tempted to sign up for the credit card to get the gameday giveaway or receive a discount on our current purchase. Every time you open a new account your credit score gets a “hard inquiry” which adversely affects your credit score. The age of your credit history also affects your credit score and that is why closing old accounts will also hinder your credit score because the longer you have a history of making payments and especially on-time payments the better your credit score will be.