Improve credit score: 10 tips to achieve your financial goals

 

 

If you’ve recently check out your scores and the numbers are below ideal not all is lost. Even though everyone wants to know how to boost credit score fast, this process can take a bit of time and effort. However, once you get a hang of the tips listed below, it’ll become much easier to reach a value financial providers are more comfortable with. 

So you want to improve your credit score, is it realistic? 

Is it possible to improve your credit score or are you a hostage to your debts? Many people just give up and settle for a low number once they realize their financial history has taken a wrong turn. However, as many financial advisors will tell you, it isn’t unrealistic to dream of a better score or even a 100 point increase. 

With each simple step you take to solve your financial mistakes you’re able to increase a little bit of your score. Americans certainly noticed this, since the average FICO score is higher than ever. That means that even you have a chance of boosting your number and getting a better chance at loans and financial services. 

10 steps to improve credit score

 

Let’s start on a journey to improve credit score together! These numbers that range from 300 to 850 get better whenever you show creditors that their investments won’t be lost on you, they’ll get a payback. So most of it involves reviewing your history and undoing a few mistakes, like forgotten bills or credit card trouble. 

Certainly, some parts of the algorithm are out of your control and will take time and patience to increase. As long as you know your way around your own financial life, things will get better. 

There is an extra tip before we begin: make these steps a habit. If you solve your financial problems once and then just give up on them, your score has a high chance of getting worse. Once they are part of your routine, it’s easier for things to improve.  

1. Review reports to improve credit score

Before you start to take action to improve credit score, it’s essential to understand what went wrong before and if there are any mistakes by the financial companies responsible. You can get one free report a year from the main firms that work with these numbers, make use of it!

Another right that many don’t know about is disputing mistakes on those reports. Studies show that 26% of consumers have at least one error in their reports that can decrease credit scores. Imagine someone opens a bank account with the same name as you, obviously you’re two different people, but the system can mix it up. 

Once you notify the credit agency they’ll research the matter deeply and determine if there has been a mistake. As soon as the problem is solved your score will increase. 

2. Pay credit card balances with strategy

Credit card issuers report your data to financial bureaus and this information is part of your score. The more you use your limit, the worse your score will be. Financial advisors recommend keeping limit use below 30%. If you’re looking for excellent scores, below 7% is even better, but unrealistic in most cases. 

For big credit card spenders there is an extra tip: pay more than once in the billing cycle. That way, you’ll keep your limit use low despite spending more than 30% in a month. 

Another important information is that missing payments will set you back, even with low limit use. Set up payment reminders on your phone or tracking app to make sure bills never get past their due date. After 29 days without payment a credit card issuer will report it as missed payments to financial bureaus. 

3. Careful with bill payment

The 29 days rule we just talked about doesn’t apply only to credit cards. Any bill can set your score back if it’s forgotten at the bottom of a drawer long enough. Payment history corresponds to 35% of your FICO scores and impacts heavily on other scoring systems as well. 

So start organizing! Create a system that allows you to track monthly bills. Whenever possible, keep bill payment automatic on your bank app, which is a foolproof way of never missing a due date. 

Do you use a calendar or diary in your office? Make monthly notes on these to remember what you have to check. 

4. Get in touch with creditors to improve credit score

Alright, things got out of hand and you need a personal loan somewhere along the line. Afterwards, you got a loan to pay off your need apartment since the family got bigger and you needed room for the kids. Debts are like this: they snowball and keep you from improving your credit score for as long as they exist. 

If your financial life has been a bit messy that is ok, but you must start fixing it now. Get in touch with creditors ASAP to set up a payment plan. It’s often possible to negotiate new deadlines and monthly payments. That way, you can offset the effect of late payments and fix a few of the problems with your score. 

5. Add to your credit mix to improve credit score

Financial firms, such as FICO, consider your credit history and credit mix when attributing a score. Thus, people with a short history might suffer from low numbers as well, even if they haven’t had major payment problems. The best way to improve this is adding a new type of credit to your portfolio. 

Someone who only has credit cards can see an improvement once they take out a loan, for example. The opposite is true, if you only took out loans so far, try a credit card to boost your scores. Choose one that reports to all three major agencies to make sure the numbers will be considered. 

6. Check past accounts you haven’t paid

Once you delay a bill and it’s reported to financial firms your data include that for up to seven years. When people learn this they almost give up, why pay now if a credit score won’t be the same again either way? Well, this way of thinking will keep you down for a lot longer. 

Paying missed bills is important to start getting back on track. If these missed payments are about credit cards, there are credit counselors that could help. Another option is filling in a debt management plan (DBP). 

7. Old accounts are your friends, keep them

Do you have old credit card accounts that haven’t been used in a while? The first impulse when you look to boost credit score is closing them up. However, that’s an awful idea because your credit history is quite important. 

These old accounts help banks and other institutions understand that you’ve been dealing with your finances for a long time. If there is a need to close up accounts, do so with new one and keep the older ones active. 

8. Don’t panic if your credit score drops a bit

Did you do everything we recommended and got to a decent score? Great, but that doesn’t mean it won’t get a slight dip in the near future. It’s a common problem since credit scoring is done by algorithms that take a lot of information into account. 

Whenever you notice this, don’t panic. A small decrease in score will barely have any effect on your financial goals. It doesn’t matter if it happens because you forgot to pay a bill on time or got new loans too fast. If it happens, the best thing to do is wait and keep track of current payments and make sure they happen on time. 

9. Improve credit score fast with a special card

There are credit building cards available on the market for people with a short or bad credit history. Consider getting one of them if most of the tips we already suggested don’t work for you. But be warned: these cards will likely have low limits paired with high interest rates. That happens because issuers consider your profile as high risk for now, which will change as soon as your scores get better. 

For these cards to work, you have to pay bills on time monthly and keep your limite use to a minimum. With time, this will allow them to apply for other credit cards with more advantages to them. 

10. Be mindful of credit repair companies

Once you start researching how to improve credit score you’ll see ads pop up all over the internet. There are many credit repair companies out there that claim to help you improve the numbers quickly, but their main service is advice. 

That means, they’ll look at your credit profile and explain where you can get better. It is something you can do yourself with minimum effort and it starts by reading this article.