If you want to improve your credit score, you need to know what’s on your report and how that impacts your score. It’s not always easy to figure out where you’re at in the process, but if you follow some simple tips and strategies you can help increase your chances of getting a better score.
Keep Your Credit Ratio Low
The second tip is keep your credit ratio low. A credit ratio is the amount of debt you have compared to the amount of credit you have. The lower your ratio, the better. So, having less than 30% in debt compared to all of your available credit is considered a good score—but that doesn’t mean it’s easy! You’ll need to take a hard look at each card on which you carry a balance and make sure that you are paying off more than just the minimum payment every month. If not, then this could be hurting not only your finances but also your ability to get approved for loans in the future because lenders will see that as risky behavior.
Pay On Time
The most important thing you can do, AG Morgan Financial Advisors advises, is to pay on time.. If you’re late with a payment, your credit score will drop. It’s also best if you are able to pay more than the minimum payment due each month because this reduces the amount of interest paid over time and helps eliminate loans quicker!
As always, paying off your balance in full every month will improve your score even more! This shows responsibility and makes lenders see that you aren’t just taking out loans for fun (or worse, buying things on credit that you can’t afford).
The Length Of Your Credit History Is Important
The third tip is the length of your credit history is important. The longer your credit history, the better your score will be. This means that if you have had a credit card since you were 18 years old and then used it for ten years, it would help your credit score much more than if you opened up one account at 25 years old and then never used it again until 30 years old when you decided to close out all accounts at once.
The lengthier the record of timely payments (and therefor, longer use of those accounts), the higher points are awarded by FICO scoring models. For example, if a person has had one account open for 10 years with no missed payments within that entire time period, their score could be as high as 850 or even higher depending on other factors such as how much available credit they have on other cards as well as what percentage of total available balance they have charged over time (the less amount charged relative to overall limit means fewer missed payments).
Regularly Check Your Report
The fifth tip is to regularly check your report. It’s important that you’re checking your credit report at least once a year, and for many people it’s even more than that. There are several reasons why it’s important:
- You want to make sure all the information on there is correct. If you find an error on there, you have time to resolve it before anything major happens with your credit score like being denied a loan or mortgage because of something on the report that shouldn’t be there in the first place