Five Surefire Ways To Boost Your Credit Score
By David Dierking
A little while back, I wrote an article titled “Five Surefire Ways To Torpedo Your Credit Rating”. A reader responded saying “Topedoing your score is easy. What are 5 steps you can take to BOOST your credit rating?” Good point!
Ruining your credit score IS easy and can be done in a very short period of time but building your credit score can take much much longer. With credit still tight and more and more people looking for ways to qualify for a loan at a good rate, looking at ways to improve your credit score is a timely subject. Plus, I’m a giver, not a taker. What my readers want, they get!
Without further adieu, here are five good ways to start improving your credit rating.
Pay on Time
This is probably beyond obvious but the easiest way to improve your credit score is to simply pay your bills by the due date. Paying on time proves to the credit agencies that you are timely and can be responsible when it comes to handling credit. Such status can earn you a lower rate on your debt since you will be considered a lower risk borrower.
Pay Your Balance in Full
Paying on time is only one piece of the puzzle though. Paying your bill in full every month shows that you’re not spending money beyond your means and that you can be counted on to repay your debts. The credit used to credit available ratio is one of the biggest factors in determining your credit score. Keep that ratio low and you’ll see your score start to climb.
Manage Inquiries into Your Credit
One of the factors that people are probably less aware of that affects your credit score is the number of credit inquiries that are made into your credit. Inquiries are made when you start becoming late on your payments or if you begin applying for new lines of credit. If you want to improve your score, you need to make sure that these events don’t happen. That means don’t apply for every store credit card that offers you a 10% discount and make sure you’ve exhausted other funding options before considering a personal loan or home equity line of credit.
Mix up the Types of Credit You Have
Your credit report will look more favorable to the agencies if you have a mixture of credit types. Someone who has a mortgage, an auto loan and a credit card will generally have a better profile than someone who carries nothing but credit card debt. One word of warning though – don’t open up a bunch of credit lines just for the sake of mixing it up. The credit agencies won’t like that.
Check Your Credit Report
You should do this whether your credit is good or bad. Knowing what’s on your credit report helps you make sure there are no errors in your credit history and gives you the chance to potentially be more proactive in correcting those errors. If someone happens to steal your identity, it’s better to know that right away than to try to clean up the mess after they’ve opened up several lines of credit and spent down your savings. Now you can get your credit reports for free.
Photo credit: Marsha Riti’s Illustrations on Flickr
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