Obtaining a mortgage, leasing a car, renting an apartment or getting a credit card, credit scores are a huge aspect of your financial life. In a poll by LendingPoint, it was found that 41% found that their bad credit caused them problems while trying to rent an apartment, while 74% stated it stopped them from living the life they wanted to live. Therefore, whether you are looking to buy a home or take out a loan, it is important to implement a few methods to raise your credit score over time.
1.Always pay your bills on time
Late or missed payments will appear on your credit report for seven years. This reflects very poorly on you as a prospective borrower, as it means you are not able to pay your lenders back. To positively influence your credit score you always pay at least the minimum payment for all your bills and loans, but definitely make sure to do so on time. Make a reminder in your phone or on your calendar so you won’t forget.
2. Keep your balances low on credit cards and any other form of debt
Your credit score is greatly influenced by your credit utilization ratio. This ratio compares the amount of credit you have available, with how much of your credit line you are using. Generally, lenders prefer to see less than 30% of your credit is utilized. Your score will also improve or lower based upon this credit utilization. That means if you have three credit cards and they give you a total of $10,000 in credit, then you should be using no more than $3,000 of your credit limit at any given time.
To positively influence your utilization ratio you can pay off your debt each month, keep your balances below 30%, and even become an authorized user on another person’s credit card account. As long as they pay off their balance and keep their card in good standing, this can increase your total credit and allow you to carry a higher balance at one time.
3. Don’t close unused lines of credit
Although you may not be using some of your old credit cards, it is important to keep them open. If you cancel these cards and you still owe the same amount as you did before, you will only increase your credit utilization ratio, This will, in turn, lower your credit score. If you struggle with holding a balance on multiple credit cards you can simply cut up your unsued cards and never use them, while still keeping them open.
4. Do not apply for multiple credit accounts too quickly
Even though opening new credit accounts might increase your credit limit, each time you apply for a credit card it will create an inquiry on your credit report. Especially if you are not accepted for these cards, you will quickly lower your score. Instead, give yourself time between each credit card or loan application for your score to heal.
5. Monitor your credit report and dispute any inaccuracies
There are plenty of different sites in which you may check your credit score for free, so take advantage of this! Check your credit score at least once per month to ensure that there is nothing inaccurate or fish that could be negatively affecting your score. If you see something that looks wrong, report it to the credit bureau.
6. Be patient
Raising your credit score can be a somewhat long process, but it is possible. It will not happen overnight, but if you have patience you will repair it in the end.