Having a poor credit score to your name can be a barrier to the quality of your life. It can affect your ability to get a new job or get approved for an apartment lease. On the other hand, maintaining a very good or excellent credit score can make your life easier. It can allow you to qualify for lower interest rates or a higher credit limit to make a large, defining purchase. If you want to reap the benefits of a credit score that helps you rather than hurts you, keep reading to learn how to improve your credit score.
Pay your monthly credit card statements on time. When you miss a credit card payments, expect to see a dip in your credit score. This is especially true if you’re over 30 days late on a payment. But even missing a payment by a few days can hurt your score. Making on time payments shows the credit card company that you’re reliable and accountable, and they reward you with a few credit score points here and there. Tip: Set auto payments for your statements so you don’t ever have to worry about remembering to make a payment on time. Even if you set up an auto payment, you can always make an additional payment after the fact too.
The longer you’ve owned a credit card, the better. In an ideal world, you opened a credit card on your eighteenth birthday, but that’s not always the case. Whichever card is your longest running card, plan to hold on to that one forever, even if you rarely or never use it. The longer you’ve owned a credit card, the higher your credit score will be.
Keep your credit utilization rate below 30%. Credit utilization measure your revolving credit against the total credit available to you. Your revolving credit is how much money you currently have spent and not paid off yet. Although it can be tempting to use up 50% to 75% of your total credit, it is recommended that you keep your revolving credit low because it will increase your credit score. If your credit utilization is ever high, that means you should pay off more of your debts.
Pay more than the bare minimum. Paying the minimum payment on your credit card statement will only lead you to paying more money over a longer period of time. It is beneficial for you to pay more than your minimum payment each month if possible because you will pay off your debts faster, and therefore decrease your credit utilization rate. Tip: Paying more than the minimum payment each month saves you money from accrued interest.
Improving your credit score doesn’t happen over night. It will take at least a month to see change and a few months to see significant difference. Even if you slip up and your credit score dips, you can get it back up in no time. Credit scores are ultimately fluid and flexible. While a credit score may not be the most accurate indicator of whether or not you meet the requirements for a job, lease, or lower interest rates, there are measures you can take that can keep you ahead of the curve. If you follow the steps above, you can increase your credit score in no time.