Blog

We’ll bet that when you were a kid nobody ever told you what a credit score was, let alone how much of an impact it would have on your future. Your credit score decides how favorable you will appear to lenders and whether you will receive a low interest rate on a loan, or even if you’ll get approved for the loan. But maybe right now your credit score isn’t as good as it could be and you want a higher score. Here are 5 easy ways to improve your credit score. 

1. Check that credit report. Do you know exactly what’s on your credit report? If not, you need to do some research. Every year you are entitled to a free copy of your credit report from each credit reporting company through Annual Credit Report. Make sure to take advantage of this! Not only will this help you dispute any inaccuracies which could be dragging your credit score down, but it can help protect you against identity theft.
2. Pay your bills on time. Missing a bill payment here and there might seem harmless when you’re all caught up, but it means a lot to the health of your credit score. Paying late, or paying less than what you originally agreed to pay, can lower your score. This goes for all of your bills (rent, utilities, phone bill, etc.). Also, keep in mind that when you ask a lender for a loan, your bill payment history is going to be a major factor in whether or not you will be approved. If at all possible, set up auto-payments through bill pay so the bills will be paid automatically each month.
3. Keep credit cards open. If you close a credit card, that means you are losing that credit card’s credit limit. This will greatly affect how your overall credit utilization is calculated, which will most likely lead to a lower score. The best thing to do is to keep the card open and use it occasionally, so the issuer does not close the card.
4. Consider becoming an authorized user. If you know someone who responsibly uses their credit card and has a high credit limit, you could ask that person if you can be added as an authorized user. This person can choose whether or not you can actually use the credit card, but even if they decide not to let you use it, it doesn’t matter. Their positive credit history will be added to your credit report, boosting your score.
5. Mix it up. Lenders want to see that you can handle revolving credit and installment credit. If you only have credit cards or only have collateral loans, consider getting the type that you don’t already have. Having a good mix of credit types makes up 10% of your score, so don’t overlook this important tip.

By trying some of these tips, your credit score (and your overall financial health) will thank you.