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Ever tried to rent an apartment, buy a car, or apply for a loan and been asked for your credit score? Then find out that it’s too low? Anything below 670 is a fair or low credit score and is considered a higher risk. It’s frustrating to be turned down (or charged higher interest) for normal things in life due to a three-digit number.
There are apps designed to improve your credit!
Unfortunately, that’s not going to change any time soon. Lenders will continue to look at your credit score to determine how risky it is to lend money to you. But, the new good news is that credit is one of the easiest things to change. All you have to do is follow a few rules and your credit score will improve.
If your credit isn’t as high as you’d like it to be, check out the tips below to improve your score.
1. Get Credit for Your Monthly Expenses
Experian Boost is a game-changer for those looking to improve their credit score. This innovative service allows you to add your monthly expenses, think utility bills, cell phone, and streaming subscriptions, to your credit report. By consistently paying these bills on time, you’ll create a positive payment history, which is a crucial factor in determining your credit score.
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2. Pay Bills Bimonthly
If you’re struggling to make full monthly payments on your bills, consider switching to a bi-monthly payment schedule. When you do this, you’re more likely to pay bills on time and in full, which results in a consistent positive payment history and a lower credit utilization ratio. That in turn improves your credit score. A positive payment history – paying your bills on time and in full – makes up a whole 35% of your FICO score so be sure to do this every month. Your credit utilization ratio – how much of your credit limit you use each month – should be below 30%. So if you make additional payments on your bills, you’ll lower your credit utilization ratio and see your score improve.
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3. Automate Your Bills
One of the most effective ways to improve your credit score, especially when managing a tight budget, is to automate your bills. This ensures that your payments are made on time, every time. You won’t miss due dates and incur late fees or interest that eat into your budget. As mentioned above, timely payments are a crucial factor in determining your credit score. Automating your bills ensures that you consistently make payments on time, which positively impacts your credit history.
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4. Don’t Close Old Accounts
It’s essential to keep old credit accounts open, even if you don’t use them regularly. The length of your credit history makes up 15% of your credit score. Closing old accounts can shorten your credit history and potentially lower your score. Use these accounts responsibly to maintain a longer, positive credit history.
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The Bottom Line
Implementing these tips and tricks can help boost your credit score so that in time you’ll be able to get the loan or credit card you want. That high-end card with all those exclusive perks will not always be out of reach. Nothing is impossible if you just put a little work into it. These easy-to-do tips and tricks should boost your score and set you on the path to improved financial opportunities.
