How to improve your credit score
What are the benefits of a good credit score?
Your credit score indicates your creditworthiness – your ability and willingness to pay back a loan – to banks and lenders. With a high credit score, you will receive lower interest rates when applying for a mortgage because you represent a lower risk to lenders.
How can you improve your credit score?
1. Get a copy of your credit report from one of the three major reporting agencies (Equifax, Experian, or TransUnion) and check for errors. You can get a free copy of your credit report once a year from www.AnnualCreditReport.com. If you know that you have no late payments but the credit report says you do, dispute it with the credit bureau. Other items to check for include incorrect debt limits and amounts owed.
2. Your payment history makes up 35% of your credit score, so it is important for you to make your payments on time. If you use online banking, you can set up payment reminders or even have the bank automatically withdraw funds from your account to pay your bills. An alternative is to set up a reminder on your computer or smart phone. You can also automate your credit card payments, though it usually only makes the minimum payment on your card.
3. Pay off your debt. Since 30% of your credit score is based on your current level of indebtedness. Don’t focus on transferring your balance from one card to another but direct your energy toward paying off your debt.
4. Keep your accounts open. Canceling a card can actually hurt your credit score because 15% of your credit score is based on the length of your credit history. Instead of closing an account, establish a good credit history by making small monthly charges to your card that you pay off on time.
Rome was not built in a day. Likewise, there is no magic bullet that will improve your credit score overnight. But if you work on the four things mentioned above, you will be able to improve your credit score.
Want to learn more? Give us a call today and we can set up a free consultation to get you ready for the big move.