How Do I Get and Keep a Good Credit Score?
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When you need to borrow money for a home, car or something else, there are a few factors lenders will look at. They will examine your income, how much other debt you have and will want you to have a good credit score. A good credit score can show that you have been able to successfully handle debt in the past and have been responsible.
Good credit can get you a better rate and less restrictive terms, as well. But how can you go about getting a good credit score and keeping that way? While it will never happen overnight, there are a few things you can do to improve your credit score simply and quickly. This article is going to take a closer look at a few of them.
Watch Out For Errors on Your Credit Report
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Perhaps the easiest way to get and maintain a good credit score is by examining your credit report and looking for errors. Receiving a copy of your report is easy and it will give you a detailed look at your borrowing history. Take some time to sift through the report and make sure there are no issues.
There are many common errors that range from having the wrong person’s information, to credit accounts that are not yours. Many of these errors could be causing your credit score to be lower than it should.
If you notice any of these errors, be sure to dispute them. The internet has resources to help you learn how to remove late payments that are illegitimate, as well as deal with a variety of other errors you may encounter.
Make Your Payments on Time and in Full
One of the most important factors in your credit score is how well you make your payments. For the best score possible, make sure to always make your full payment every month. Missing payments hurts your score a ton, and it can be difficult to recover from in some cases.
If you struggle with remembering to make payments, set reminders for yourself or even have the payments automated. Also, if you find yourself struggling to afford the payments, find ways to reduce how much you spend on the credit card, or increase your limit, if you can afford it.
Keep Your Credit Utilization Low
A low rate of credit utilization is also a big part of a better credit score. Your credit utilization is the amount of your available credit that you are using every month. In general, you want to keep your credit utilization under 30%. This shows that you are being responsible and not overusing credit.
If you consistently use almost all of your credit each month, it can be a sign you aren’t managing your credit well. While being careful not to overuse your credit is crucial, you also don’t want to never use it. In order to grow your score and build credit, you need to use it, just ensure you do this carefully.
Don’t Cancel Old Credit Cards
The age of your credit is another factor in determining your credit score. If you’ve had credit cards for a longer period of time, and used them responsibly, your score will be higher than someone who has only just got access to credit.
Because of this, don’t go around closing old credit accounts, as it could hurt you. For example, let’s say you have a credit card you’ve had for a decade, and you just got a new one last year. While you might think to close your old one and continue on with only your new one, we’d advise you not to.
If you do, lenders will see that your average age of credit is very short and may be a little weary of you. Credit scoring rewards those with credit accounts that have been opened for long periods of time, so use that to your advantage.
In conclusion, these tips will be able to help you gain and maintain a good credit score. It can take some time, dedication and sacrifice on your end, but it is well worth it and will make borrowing money in the future much easier and more affordable.
*This is a collaborative post.
