8 ways to raise your credit score

Your credit score is one of the most significant measures of your financial well-being, as it dictates your ability to obtain loans, credit cards and even housing. Bettering your credit score opens doors to better chances in finance and lower interest rates. Below are some tested methods that might just assist you in raising your score.

1. Check Your Credit Report Regularly

To understand where you stand in terms of your score, checking it is the first thing you should do. Request for a free copy of your credit report from the three main bureaus namely: Equifax, Experian and TransUnion. Scan through the report looking for wrong entries or things that might not be correct like wrong identity details, alien accounts or wrong pass statuses. Disputing these mistakes can aid a great deal in boosting up a score.

2. Pay Bills on Time

Payment history is the single most essential element in determining a score, accounting for approximately 35% of the total1. To maintain good credit, it’s imperative to make prompt bill payments every time. You might want to set reminders or automatic payments to avoid any missed deadlines. Do not let it be observed that you have missed some paying dates; you should get back on track with them and remain so thereafter. With time(longevity of promptness), your scoring will improve with every day.

3. Reduce Credit Card Balances

Another significant factor is credit utilization or the percentage of your credit limit that you are using, which makes up about 30% of one’s total credit score2. Leave your ratio at below 30% if possible. If for example you have an available limit from your issuer(s) amounting to $10,000 then ensure that a lingering figure does not exceed the mark of $3,000. Thus, as much as possible try to pay down high balances because they can lift scores drastically.

4.Curb Unnecessary New Lines of Credit

Whenever a new line of credit is applied for, hard inquiries are seen lodged therein but these do lower scores temporarily in essence. Moreover prolonged inquiries made during short other periods may result into a much lower rating than earlier existent one. Avoidant instances include new lines applied concerning debits upon application together with what follows next as space about them needs be widened so as not alter significantly upon existing evaluation scores.

5. Don’t Close Old Accounts

Credit score is just about 15% based on the length of your credit history2. That’s why if you close old accounts, it reduces the total amount of credit you have and thus makes your credit history shorter which is bad for you scores. When opening new accounts with banks for instance, keep “savings” account alive and making transactions with it to maintain a long period of good records on loaning.

6. Have a Diverse Range of Credits Too

Your credit score can be positively affected by having various types of credit accounts like: loans from the mortgage, auto loan holders as well as people who give out money in form of plastic cards. This factor takes into account about 10%2 on your total points. If all other things remain the same except for one type, then try to get more types. But don’t just go around requesting other people to give you loans for the sake of having them; you must analyze how they fit into what you want financially.

7. Pay Off Debt Strategically

You should have a plan how to repay your debts. The first step while repaying other loans should be focusing on clearing high-interest loan accounts first. This is called by some ‘the debt avalanche method’, since it means that you would pay less interest when clearing debts faster. On the other hand, one could use ‘the snowball approach’ where small debts are paid off first hence providing psychological rewards owing to quick accomplishments.

8. Regularly Keep Track of Your Credit

By keeping tabs on your credit regularly can help you keep track of how you’re doing financially. All sorts of companies will provide free services to monitor your credit that inform you when a shift in your credit report takes place. That way, you may identify latent problems at an early stage and make some adjustments before these influences have a negative impact on your rating.

Conclusion

There is need for a combination of good finance habits and strategy in order to raise your credit score. Monitoring it frequently, making timely payments for orders used through cards, saving up funds in relation to amounts borrowed through cards…Leads towards; After all said, raising it is not about speed but endurance towards greatness after all tumults are pacified. So patience besides consistency makes one pass their exam with flying colors.