4 Tips for Improving Your Credit Score
Your credit score is the key to not only getting approved for credit but also how much you pay for it. In some cases the higher your credit score, the lower your credit card or loan annual percentage rate will be. Some factors that affect your credit score are out of your control. Others are not, so here are four tips for improving your credit score fast.
Fix Errors Fast
Banks, credit card companies, mortgage companies, and other lenders do make errors when reporting your credit data. That’s why it’s important to regularly get and review your credit report. By law, you can get a free credit report once a year from each of the three main credit bureaus: Equifax, Experian, and TransUnion. Every four months order a report from one of the bureaus and start the cycle over the next year. If you find any errors, notify the company responsible for reporting it immediately.
Maximize Your Available Credit
Many people will tell you to close all but one or two of your credit accounts. Otherwise, it looks like you have a ton of credit card debt. Don’t listen to them. Your credit utilization ratio is one factor that contributes to your credit score. It’s based on how much of your available credit you’re using. If you have several credit cards with little or no balance on them, your credit utilization ratio decreases. In turn, your credit score increases. So, keep your accounts but pay off or pay down your balances.
Monitor Your Credit Limits
Reaching or exceeding your credit limits on your revolving credit accounts brings down your credit score. A credit card company might raise your credit limit but fail to notify the credit bureaus. Once you begin using that additional credit, it might appear to the credit bureaus that you’re exceeding your available credit and that will lower your credit score. If a company increases your credit limit, check your credit bureau reports and ensure they reflect the correct credit limit. If they don’t, call the company and have them send an update. Then confirm the correction was made when you get your next free credit report.
Protect Your Identity
Identity theft can wreck all the hard work you’ve done in improving your credit score. That’s why it’s so important to check your credit bureau reports on a regular basis. If your credit score is suddenly much lower than the last time you received one but your credit history hasn’t significantly change, identity theft might be the root cause. Many financial institutions, credit companies, and insurance companies offer identity theft insurance. You might want to check on rates and take advantage of the protection.
Keep in mind that a clerical error at the credit bureau can also create an issue. Someone could very easily have mistyped your social security number. That mistyped social security number might be valid and belong to someone who has a poor credit history. Check your identifying information on your report before assuming identity theft.
Once you improve your credit score, it’s a matter of maintaining your good credit and enjoying the benefits it provides.