If your credit score is satisfactory you’ll probably qualify for new credit card and loan offers, but you probably won’t receive the best interest rates. A mediocre credit score doesn’t necessarily mean you won’t be approved for credit, it just means that you won’t have all the advantages people with higher credit scores do.
A lower credit score means that the lender might ask you to put down a deposit in order to be approved for a credit card, loan or line of credit. But why go through all that trouble? Why not just improve your credit score and make sure you get all the bells and whistles with the lowest interest rate!
It is said that you can improve your credit score in six to 12 months. It seems that this short period of time is well worth the effort to improve your financial well being and save hundreds (maybe even thousands) of dollars on interest charges.
Here are four ways to improve your credit score:
Make sure your info is up to date
Lenders such as banks and other credit companies use your credit score along with your income and employment information, current debt balances and your payment history to determine if they want to lend money to you a.k.a. to determine if you’re credit worthy. Keeping this information up to date is a key factor in improving your credit score.
Order your credit report to determine if your personal information such as home address, contact information and employer are up to date.
Set up regular payments
There’s nothing worse than late credit card and other debt payments. Even one payment that is more than 30 days late can really hurt your credit score. If you want to improve your credit score make sure your debts are always paid on time.
Setting up regular payments is the easiest way to do this. If you have regular income, set up regular payments to coincide with your pay schedule. This way you don’t even have to think about logging in to your online banking or app because it’s automated.
Make more than the minimum payments
It would be great if you could improve your credit score simply by making payments on time. Unfortunately it’s just not enough. Making debt payments on time is only one part of the equation, but paying off the balance is another part of it.
Lenders also look at your outstanding balances versus the total credit limit. If your balances are too high your credit score is probably low. Try to make more than the minimum monthly payments on to all your revolving credit accounts.
Keep your bills paid on time
Some people (probably many) don’t know that your other monthly bills – other than credit cards – are also taken into consideration when calculating your credit score. Utilities such as your cable and cell phone as well as your electric and hydro bills are considered credit accounts and your payment history factors into your credit score. If you order your credit report you’ll see these accounts on there along with your loans and credit cards.