Once someone understands the value of using credit, and how to use it wisely, they may be wondering how to improve it. Here are a few tips that will make raising a credit score simple and efficient. After all, staying financially healthy could mean the difference between having a great choice available with good credit, or having less unfavorable choices with bad credit.
1. Be Mindful of Credit Card Balances
As far as tips and tricks go, one way to dramatically impact a credit score is to obtain and maintain a credit card. Credit cards are not all that bad and could help in raising a credit score.
However, those balances should always be on a constant watch. Due dates on credit card payments, interest rates, and other details should be noted. This is especially important, as multiple credit cards could create high risks and high interest!
2. Take Down Those Credit Card Balances First!
Credit cards build up credit, but not paying them on time or simply making the minimum payment every month will drag the score to the ground very quickly. Not to mention that credit card balances left unchecked could accrue high interest rates.
Tackling those credit bills first and on time means being able to tackle other important bills, as well as helping raise up a credit score over the course of several months.
3. Leave that Old Debt on that Report
Some people believe that removing old debts out of a credit report will improve their history to institutions that do credit checks. However, clearing up old debt is a bad idea, while negative items that are bad for a credit score will disappear from a report in a few years.
Good debt on the other hand, should not be removed either. Good debt is usually something that was fully paid off and is good for anyone’s credit. The longer the history of the good debt, the better for the score.
4. Pay on Time
Always know when the deadlines are for important payments. Whether it’s credit cards, mortgages, car loans, or personal loans, paying bills on time will always be a good thing!
For instance, those that have a car title loan should make sure that it gets paid off early, as well as their credit cards. That’s because both bills are practically tools for raising up a credit score, especially when used appropriately.
5. Avoid the Slightest Whiff of Risk
The best way to avoid lowering credit is to avoid doing something that could risk damaging the current credit score. Missing payments, or not making the minimum payments, are early warning signs, and not a good look for your credit report. The last thing anyone wants to do is default on a loan or miss payments for a mortgage.
Always plan and execute when taking on a loan or a new debt. Understand that maintaining and raising a credit score means avoiding any and all risk!
6. Use Credit Cards Responsibly
Credit cards are great pieces of plastic that almost anyone can use. However, one should understand that the credit limit is set, and they should never try to go beyond those limits. Doing so will create more risk, as well as raise those interest rates to levels that may be harder to pay back!
Not to mention that credit cards allow people to pay the minimum each month, which means the interest will accrue with each passing month. And, this also raises those interest rates. Pretty soon, a person who uses their credit card irresponsibly will have mountains of debt to pay, or even obtain another credit card to clear off the debt of another.
This is an endless cycle that no one wants to ever get caught in, but that doesn’t mean that credit cards are all bad. In fact, they are a pivotal piece in raising a credit score, especially when someone is just starting out.
7. Closing an Account Won’t Make that Account Go Away
As mention previously, leave debt on the report, even if it’s bad debt. Even if someone can close an account, it will still show up on their credit report, and may be considered by a score!
8. Don’t Open Too Many Accounts Too Fast!
Now some might be under the impression that raising a credit score means accruing multiple debts. However, for those just starting out, know that having a few credit cards, some loans, and other debts to pay is just as bad!
This approach could end up backfiring, especially if someone can’t keep up with every single payment on time. The endgame of this plan creates too much risk and could lower a credit score faster than it would raise it!
9. Don’t Close Unused Credit Cards to Raise Up a Credit Score
As a short-term strategy, closing unused credit cards makes sense but doing so to raise a credit score is ineffective. So is amassing multiple debts to skyrocket a credit score. Raising a credit score wisely takes discipline and patience.
There’s no easy way of doing it but following a plan and paying debt on-time is a tried and true method that will work over a period of a few years or more!
10. It’s Okay to Check up on One’s Credit Report!
Raising a credit score means checking up on the report to ensure that someone is on the right track of their financial goals.
People should take note that it’s okay to request and check one’s own credit report. This won’t affect the score, but this is only certain if they order their credit report directly from the credit reporting agency or through another organization authorized to provide credit reports to consumers.
As a result, raising a credit score is not easy. It may take a lot of time before that number goes above one’s expectations. However, these tips and tricks are made to let people know is that it is possible, and people should always calculate financial risks and rewards when it comes to raising a credit score!
