Money

How You Can Raise Your Credit Score

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A few years ago, I wrote a post on how I raised my credit score by 168 points. It was relatively easy once I finally got focused and started paying attention to some things. If you are reading this, I want you to know that you can raise your credit score as well. Today, I want to give you five tips on how you can increase your credit score by 100 points.

Get Current

If you’re not current on your bills, get there ASAP. A lot of people don’t realize that 35% of their credit score is the payment history. That’s more than a third of your credit score. The goal is to always make on-time payments. In the beginning, it might be rough, but it has to be done. Better interest rates and a higher credit score will be soon to follow if you do this.

Pay Down Your Debt

Paying down your debt is something else that needs to be done. The amount of credit that you owe is 30% of your credit score. Your debt to credit ratio is one of the things lenders look at when deciding if they want to offer you more credit or not. Credit companies recommend your debt to credit ratio by 30% or lower. I’m making strides. I’m currently at 44%. I have a little bit of work ahead, but I will get it down to 30% soon.

This post has 40+ side hustles that you can use to make money to pay down debt.

Negotiate

The next tip to help you raise your credit score is to negotiate payments with your creditors. We are all humans. Sometimes you may not be able to pay a bill or you may forget one. Instead of ignoring it you should contact your creditors and let them know your situation. You never know what can happen. You may be able to get the late fee waived or possibly negotiate a lower payment. You will never know what may happen until you contact them.

Continue to Pay on Time

Make the habit of paying all your debt on time. As I discussed earlier payment is 35% of your credit score. If you need help remembering the pay dates you can set up auto payments online through your bank or credit union. You can also set up payment reminders with a service like Mint or Personal Capital.

Use Credit Cards Wisely

I didn’t use my credit card but once or twice during the time my credit score increased. If you plan on using yours make sure you pay it off each month. You don’t want your debt to credit ratio to get higher. One tool that I used to help me

One tool that I used to help me during this journey to better credit is Credit Sesame. Credit Sesame gives you your credit score and a credit report card for free. On your credit report card, it shows your grades for your payment history, credit usage, credit age, account mix, and credit inquiries. By seeing that info you know what you need to work on. Credit Sesame also shows you recommendations and actions that you can take to get better credit. If you’re trying to increase your credit score I’d recommend anyone to check out Credit Sesame.

Apply For New Credit Accounts As Needed

Try not to open many credit accounts in hopes of improving your credit scores. It doesn’t work that way. It would only harm your credit scores in a whole lot of ways. You become tempted to overspend, and that would increase your debts. Only apply for new credit accounts when it is needed and necessary. Try not to apply for too much new credit. It can result in multiple inquiries. The only benefit of opening a new credit card is that your credit limit gets increased. However, it will also create a hard inquiry on your credit report. There are two types of inquiries: soft and hard inquiries. The soft inquiries include checks done by financial institutions and credit card companies you have business with, checking your credit, or permitting an employer to check your credit. It doesn’t reduce or even affect your credit score in any way.

On the other hand, hard inquiries occur when you apply for too many new credit cards, an auto loan, a mortgage, or any other form of credit.  Multiple hard inquiries can reduce your credit score. It will affect your credit score negatively, and the effect stays for over two years.

Keep Unused Credit Cards Open

The older your credit age is, the more appealing you will appear to lenders. Not closing unused credit cards is a smart move. As long as they are not costing you any money, keep them open. Closing an account may reduce your credit score. It doesn’t even close off your debts. So, you end up owing the same amount but with fewer credit accounts, which may affect your credit scores. But if you don’t close down the unused credit cards, the credit history remains on your credit report, which lenders will find credible.

Dispute any faults in Your Credit Reports

The next one is very important if you want to raise your credit score. Always check your credit reports to identify any inaccuracies. Check the credit reports at the three credit reporting bureaus; Experian, TransUnion, and Equifax. Any false or incorrect data could bring down your credit scores. Dispute the data if you come across any faults or errors and have it get corrected right away. Monitor your credit regularly. It would help you spot any mistake before it causes any damage.

Use Credit Monitoring to Track Your Progress

An easy way to track your credit score progress is by using credit monitoring services. It would help you know how your credit score changes. These services monitor the changes in your credit reports, many of which are free services. They give you access to at least one of your credit reports from Experian, TransUnion, or Equifax’s monthly updates. They also help you prevent fraud and identity theft.

Contact Your Creditors

You’d be surprised at the help your creditors can offer you when you contact them. If you have any issues, talk to your credit card issuer. Many of them have established programs that will reduce your monthly payment or interest rates until you are more financially capable. They may even offer a mutual agreement beneficial to both parties. These acts will help you pay your debts and raise your credit scores.

How are some ways that you can raise your credit score?

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One Comment

  1. Great tips! One of the biggest things I’m trying to do right now to boost my credit is to pay down my debt and keep making on-time payments. I know that over time as my history increases, my score will go up.

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