A good credit score is important in today’s world. It can help lower your borrowing costs and help you to pay less for insurance. It could even help you land a job! That’s because lenders, insurance companies and a growing number of employers are using credit information to make decisions. What’s the best way to increase a credit score? Here are four important steps:
Pay your bills on time. It’s the single biggest factor. On-time payments can provide a big boost to a person’s credit score. Likewise, late payments can dramatically lower it. The bottom line: Your credit score reflects how well you make your payments on your mortgage, credit cards, student loans and other financial obligations. Your payment history is responsible for a third or more of your overall score. Consistent, on-time payments are vital.
Check your credit report regularly. Checking your credit report at least once each year (preferably more) is key to making sure that the right information is being reported to the credit bureaus. You’re also more likely to catch signs of identity theft earlier. To obtain a free copy of your credit report from each of the major credit-reporting agencies — Experian, Equifax and TransUnion — go to this link.
Correct any errors in your credit report. Credit scores reflect the quality of your credit record, and mistakes can lower your credit score. After you’ve reviewed your credit report with each of the three credit-reporting bureaus, you’ll want to take steps to correct any errors.
Keep your credit utilization low Aim to use only a small percentage of your available credit. Maxed out credit cards or balances all approaching a credit limit will certainly lower your credit score. Have you heard the term credit utilization? That’s the percentage of your available credit that you are using. Lenders and credit-scoring systems reward those with low credit utilization rates. Generally, a good credit utilization rate is less than 30 percent. Simply put, that means you’re using less than 30 percent of the total credit that is available to you. On a credit card with a $10,000 limit, that means keeping your balance below $3,000.
Consumers with high credit scores often enjoy lower rates for mortgages and other types of consumer loans and lower premiums on some types of insurance policies. The savings can really add up over time. A high credit score also can help you during a job search, since some U.S. employers conduct credit background checks on applicants.
Does a good — or great — credit score seem out of reach? Are you frustrated with where you are financially right now? I can help you take control of your finances. I believe that paying down — and off — your debt is the safest and best financial move you will ever make. I’ll show you how, step by step. Get started on a brighter future today! Give me a call at (503) 679-3490.