If you need to get your credit rating improved, you’re not alone. Millions of people want to see their credit scores go up in order to have lower interest fees and more favorable opportunities for loans. There are plenty of simple ways to get your rating up, but it will take some time.
1. Pay Your Bills on Time –
When you pay your bills is one of the biggest factors on your credit report because past performance is a good indicator of future performance. You’ll need to pay all your bills on time from credit card payments to utility bills. Late payments show up on your credit report for seven years, but their effect decreases over time.
2. Pay Off Debt –
If you have any outstanding credit card debt, you should try to pay it off. It may seem better to pay smaller balances first, but choosing the larger ones first will lead to an improved showing on your credit score. It’s also a key part of the next step. A Debt Management Program could help pay off your credit card debt.
3. Keep Your Credit Utilization Ratio Low –
This ratio makes up 30% of all credit scores. Basically, it’s how much of your credit limit you spend at any time. If you have a credit limit of $10,000 and charge $2,000 a month, you have a credit utilization ratio of 20%. Your ratio is made up of your statement balances on all your cards over the past year divided by 12. Creditors like a ratio below 30%, so keep it low. As mentioned above, you should pay off debt. You should also consider becoming an authorized user on another responsible person’s credit card.
4. Only Apply for New Cards as Needed –
While having multiple cards is a good way to keep your ratio low, too many applications can cause unnecessary damage. They lead to too many hard inquiries, which stay on your credit report for two years. They also lead to the temptation to overspend just to keep your ratio up, leading to credit card debt you don’t need.
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5. Pay Twice a Month –
Believe it or not, paying your credit card fees off twice a month looks better on your report. Even if you pay off your balance every time, a once-monthly report would show you reaching your limit every month, which leads to a utilization ratio of 100%. Paying twice a month means a lower running balance and a lower ratio.
6. Request a Limit Increase –
This is a good idea if you have long-standing cards that are frequently used. Every six months, you can contact the credit card company and request a small increase. If it’s just by a few hundred dollars, most companies will accept it automatically. If they want more information, decline the request. Also, avoid asking for an increase on new cards.
7. Use Your Dormant Cards –
Keeping your older cards active is a good way to prevent banks or card companies from reducing your credit limit and lowering your utilization ratio. You can also try to downgrade an older card if it has an annual fee. You just have to ask your credit card provider.
8. Get a Credit Builder Loan –
This special loan is used to improve your credit rating without adding on to your credit card inventory. All you do is make monthly payments into an interest-free CD for up to 24 months. When the time’s up, you get all the money back minus bank fees.
9. Join a Credit Boost Service –
Major credit agencies offer these services that can be linked to your bank account. They can add utility bills and other regular payments to your credit report.
10. Fix Report Errors –
If you see something on your credit report that looks off, you can bring it up with the reporting agency. These errors can be corrected in a short time, and they can improve your report and your score by more than you might expect. It’s always smart to check your credit report every few months for any errors. You can get your free credit reports by visiting www.annualcreditreport.com
