How to Improve Credit: 3 Tips and Tricks
Do you understand how the credit system works? If you’re like most Americans, you probably don’t.
According to a 2019 study, four in ten Americans have no understanding of the factors that impact their credit scores.
However, the unfortunate reality is that our credit plays a huge role in our lives. Because of that, it’s worth understanding how to improve credit if you have a low credit score.
Wondering how you can go about doing that?
Read on to learn more.
1. Keep Your Credit Utilization Down
One of the most significant factors impacting your credit score is your credit utilization. For example, if you have a $3,000 credit limit and a balance of $600, you’re utilizing 20% of your credit.
To increase your credit score, most credit experts recommend keeping your balance below 30%. If it climbs higher, it can start to harm your score.
That means that depending on how many lines of credit you might have open, you might have to be strategic with your payments. If you’re utilizing more than one line of credit, it might be in your best financial interests to try and prioritize getting that below the 30% threshold.
You can also look into consolidating your debt. Check out this article for more help with that.
2. Be On-Time With Your Payments
Lenders want to see a consistent payment history, and because of that, making on-time payments is essential. Failing to do so even once can cause your credit score to dip down. These marks can then stay on your credit report for up to seven years.
If you have the financial means to do so, consider turning on automatic payments. This will keep you from forgetting to pay your bill when the next month rolls around. It’ll also force you to save enough money to afford the payment.
If you miss a payment one month, don’t delay in paying it back the next. The longer you wait to make a payment, the more it’ll affect your credit score.
3. Raise Your Credit Limit
Raising your credit limit can seem scary since it opens up the doors for you to borrow excessive amounts of money. That said, in some instances, pushing your credit limit up can be beneficial.
The plus side of raising your credit limit is that it brings down your credit utilization. However, if you already have a poor credit score, it might seem like you need the additional credit and that an impending financial crisis is around the corner.
You’ll also want to avoid raising your credit limit if you often forget to make on-time payments.
Understand How to Improve Credit
Credit is something that most people don’t fully understand. That said, it affects all of our lives in myriad ways, which is why keeping your score high is so important.
Use this guide to help you better understand how to improve credit and get your life back on track when necessary.
Are you looking for more guides and tips on how to boost your credit score? If you are,