It is hard to do anything in this world today without credit, especially excellent credit. Having bad credit can be discouraging and make it hard to get a loan, a cell phone, or a credit card. But there are things you can do to help boost your credit score. Doing the following five things can have a significant impact on improving your credit score.
1. Pay Bills On Time
If you want to build up your credit, you must pay your bills on time. This includes your utilities and your credit card bills. Your payment history is a crucial factor in building and maintaining a good credit score. The longer your history of on-time payments, the better your credit score. To help improve your credit, make sure that you don’t miss a payment for more than 29 days. If a payment is late longer than 29 days, the creditor can report it to the credit bureau. A late payment can stay on your credit file for at least seven years.
2. Credit Builder Loan
What is a credit builder loan, you ask. Simply, it is a loan that can help you build or establish credit. You don’t have to have good credit to get approved, but it can help. This type of loan is ideal for people who are new to credit and trying to establish it.
A credit builder loan is not like most loans. With this loan, when you are approved, they keep the money in a bank account. You don’t get the money until you have repaid the loan. This allows you to not only build your credit but build savings too. Once you have repaid the money, they release it to you. The creditor will report the payments to one of the credit bureaus, although, if possible, try to find a creditor that reports to all three.
3. Manage Revolving Account Balances
Revolving credit includes credit cards and other lines of credit. Your revolving credit balances can affect your credit file. The more credit you use, the bigger the impact on your credit score. By maintaining a low balance, you can improve your score. You do this by having a low credit utilization rate. This means not maxing out your credit card. Only use a little of your credit and then pay it off.
4. Work On Past Due Accounts
Delinquent accounts can hurt your credit score. If you are behind on any of your bills, you should bring them current immediately. You can speak to the creditor to figure out the best way to do this before it goes into collections. If an account goes into collections, try to pay it off as soon as possible. Once you pay it off, it means that they can no longer sue you over the debt, and the collection agency can stop reporting the debt to the credit bureau. If the debt on your credit file contains false information, you can have it removed.
An account in collections is a serious mark on your credit file. If you have many of them, then it can bring down your credit score. The best way to stop this from happening is to pay your bills on time.
5. Limit Hard Inquiries
If you want to build your credit up, you may feel like you should apply for multiple credits cards and loans at the same time. This is not a good idea. When you apply for a credit card or loan, there is a hard inquiry on your credit file. This can hurt your score. While routine credit inquiries have a minor effect on your credit score, the more hard inquiries there are, the bigger the impact. If you are looking for a credit card or a loan, check the rates before applying. Once you think you have found the best option for you, then apply. Keep your applications small. One to three at a time and wait a few months between batches.
Boosting your credit score can help you get approved for loans and credit cards. These five effective ways are sure to boost your credit score quickly.