Your credit score affects many aspects of your financial future. It determines if you get approved for home or car loans, or even other credit cards. It can even affect your insurance premiums. No matter the state of it, you can follow these simple tips to boost your credit score.
Always Pay Bills on Time
One of the easiest things to do is making sure you pay your bills on time. This will boost your credit score. On the other hand, expect your score to drop if you pay bills late or settle your account for a discount.
Maintain a Good Credit Utilization Ratio
The credit utilization ratio looks at how much of your credit limit you use. It’s calculated by dividing your total balance (across all cards) by your total limit (across all cards). The lower the ratio is, the better your credit score.
You can even boost this ratio by asking for a higher credit limit or becoming an authorized user on someone else’s card.
Think Before Opening or Closing Credit Accounts
This credit utilization ratio is why you may want to keep a credit card open, even if you never use it. Remember that if you close a credit card, your ratio will drop. That being said, you may still want to close a card in some situations, such as if it has high fees.
Don’t just think before closing credit accounts; think before opening them as well. Unnecessary credit can lead to hard queries, which lowers your score. It can also tempt you to build debt.
Pay Off Debt
Paying off excessive debt will also boost your credit score. This typically goes back to your credit utilization rate.
Check Your Report and Dispute Inaccuracies
One often-overlooked step to boost your credit score is to make sure to check your score occasionally. This gives you the chance to spot errors and dispute them.