When it comes to the importance of improving your credit score, it is almost as important as losing weight!
Whether your credit is bad or relatively okay, you need to know your current position before you try to improve your credit score. Free credit reports can be obtained one every calendar year. If you haven’t gotten yours yet, now is the time to do so. Before proceeding with anything, make certain there are no mistakes on your credit report. If you find something fishy, be sure to report it, have it investigated and maybe even have it removed from your report.
If you want to improve your credit score, like we all do, then here are a few steps that will help you quickly improve your credit score:
1. Pay Down Your Current Cards – While it may not be at the top of your list, it is important to pay down your current credit cards. When you go into a bank for a loan, lenders want to see a significant difference between your available credit and the credit that you’ve used – or are currently using. Balances under 30% of your credit limit are great, but lower than 10% is fantastic! Start with the highest-rate credit card or the credit card that is closest to be being paid off.
2. Get a Credit Card – If you don’t already have a credit card or just have one, apply for a new credit card. You can build your credit by using your credit and then paying off the balance. If your credit happens to be too poor, get a secured credit card. These are similar to that of a pre-paid debit card, as you load money onto the card and that is your credit limit, except that these report to the credit bureaus. Make sure to get a secured card that reports to all three of the major credit bureaus in order to benefit the most.
3. Get an Installment Loan – Revolving, which is considered a credit card, and installment, which is a student loan, a mortgage and a personal loan, are known to be the best types of credit to improve your credit history and your credit score. Get an installment loan if you can – even if it’s a small personal loan.
4. Don’t Max Out Your Cards – There’s no reason to max out every single one of your credit cards. Regardless of whether you pay it back quickly or not, your credit score will not benefit from maxed out credit cards.
Most delinquencies will appear on your credit history for as many as seven years, so you can’t expect to rebuild your credit history and improve your credit score overnight. It is possible to improve your score, though, and it is worth the time and effort to do so. Follow the four steps above and you’ll be well on your way to improving your credit score!