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Five Steps to Improve Your Credit

The importance of a good credit score can’t be understated. In you want to buy a house, finance a new car, apply for a new credit card, or even apply for a new job, you want to have good credit. Why? Because credit scores are indicators of your past credit habits. Landlords, creditors, and potential employers will be looking at your credit score to determine how well you handle credit. The higher your score, the more likely things will work to your benefit.

On the bright side, a less-than-ideal credit score can be turned around. Even major credit crises, such as bankruptcy or foreclosure, only remain on your credit score for seven years. Even if you haven’t experienced these issues, you can still improve your credit score.

Here are five things you can do to improve it.

  1. Check Your Credit Report for Errors

    It does happen: maybe an item appears twice on your credit report, or maybe you closed a collections account and it’s reflecting as still being open. Maybe it’s something as minor as your name being misspelled, in which case you wouldn’t be getting credit for your on-time payments. Whatever the case, the first and easiest thing you can do is check your TransUnion, Experian, and Equifax reports for any errors. You can submit a dispute on your own, or you can take the far easier route and call the number below for a free credit report summary.

  2. Use as Little of Your Credit as Possible

    What is your credit utilization? Do you know what credit utilization is?

    Credit utilization refers to the amount of credit you have available; versus the amount of credit you’ve used. Ideally, you want to keep this number at around 5.6%. You can figure this out on your own. First, figure out your credit limits. For example, if you have an $8,000 credit limit on one credit card and $10,000 on another, then your total available credit is $18,000. Now figure out your balance and divide that by your total available credit. So if you’re carrying a balance of $5,000 and your available credit is $18,000, then you’re using 27% of your available credit.

    And again, you’ll want to keep this around 5.6%, because according to Experian Decision Analytics, people with the best credit scores usually maintain around 5.6% of their credit utilization.

  3. Make Payments on Time

    It’s not enough to just make payments on your credit cards. You also have to make them on time, otherwise you’re going to get hit with a late fee. One helpful way of doing this is by setting up payment reminders, which can be set up through your bank’s website. Setting up payment reminders means that your bank will send you an email or text message when your payment is coming due.

    Alternatively, you can also enroll in automatic payments, which means you don’t have to remember anything – the payments will be automatically deducted from your bank account each month. All you have to do is make sure there’s money in the account.

  4. Take Care When Opening/Closing Credit Cards

    If you’re looking to reduce the amount of credit you use, you might see closing out your old accounts as a beneficial option. Be careful about doing this. Not only does opening new credit card accounts hit your credit report, closing them does too. Additionally, maintaining a lengthy relationship with a creditor can work in your favor because it speaks volumes of your long-term financial responsibility. For that reason, you’ll want to take care when closing credit accounts – do so sparingly, and leave your oldest account open. That way, your credit score will decrease the least.

  5. Cut Down on Debt

    When you look at your debt, you can feel a bit overwhelmed, especially if you’ve accumulated a great deal of it. Just remember the old joke/adage: “how do you eat an elephant? One bite at a time”. The point being, no matter how large it is, your debt can be tackled regardless of size, so long as you do it a little bit at a time.

    First put together a budget. Next, figure out how much you owe to each lender. Once you know this, figure out which lender is charging the highest interest and pay it off first while making the minimum payments on the other accounts. Once the first lender is paid off, move on to the next-highest, and then the next-highest, and the next-highest, etc. until all of your debts are paid off.

    Again, it may seem intimidating, but by chipping away at your debt little by little you’ll find yourself debt-free before you know it.

    When you’re ready to get your credit report summary, call the number below. You’ll get the summary and consultation free of charge, without an obligation to purchase anything.

    Want more tips and tricks on how you can repair your credit? Check out our credit repair website.

    The information on this page is not intended to be legal advice. Our participating providers will offer an individualized consultation to determine the right services and products for you, if any.


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