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Are you a credit card holder and looking for 100% working tips to improve your credit score?
Your credit card score plays a major role in measuring your financial wealth. It showcases to lenders how responsibly and better you can use credit. The better you score, the easier you’ll find it to get yourself approved for new lines of credit or loans.
In this blog, we will discuss the 11 best tips to improve your credit score. So, let’s get started!
What is a Credit Score?
A credit score is a number that helps you indicate your likelihood or creditworthiness to let you pay the liable amount. The expected range of credit scores is around 300 to 850.
Your credit history reveals a lot about your credit score, which includes information like repayment history, total number of debts, number of accounts, and other factors. Lenders leverage credit card scores to determine your creditworthiness and whether you’ll repay the loan on time.
The three credit bureaus, TransUnion, Experian, and Equifax, dominate the market for gathering, analyzing, and distributing cardholder information in the credit markets. Financial institutions widely use the FICO credit score model.
Why Does a Good Credit Score Matter?
A good credit card score opens the door to great deals on credit cards, loans, insurance premiums, cell phone plans, and apartments. Moreover, a poor credit score can hammer you into paying more.
Good or impeccable credit can offer multiple benefits to cardholders, including some necessary lifetime savings. Let’s take a sneak peek at those benefits.
- It is cheaper to borrow money.
- You’ll be offered the best rates on homeowners and car insurance.
- You can benefit from the best rewards.
- Develop a great reputation.
- You’ll be prepared for the future.
Since credit card scores have become an indispensable part of our financial lives, it pays to know how your actions impact numbers. You can create, safeguard, and take advantage of good credit scores irrespective of your income and age.
11 Best Tips to Improve Credit Score
It takes a longer time than usual to improve a credit score as it is not a one-night process. However, you can increase the process by considering different ways. There are a number of ways to improve your credit score. We have highlighted the 11 best tips for you for better credit scores and gain more financial freedom. Let’s check out these proven tips;
1. Timely Payment of Bills
Paying all your bills on time is the most crucial thing you can do to help improve your credit score. For lenders, the ability of a person to keep up with their credit card payments depicts that they are liable for taking a loan and paying it back.
However, you must understand that your credit card bills do not just impact your credit score. All you need to do is ensure timely payment of bills, including student loan debt, utilities, and medical bills (if any).
2. Don’t Open Multiple Accounts at a Time
VantageScore and FICO look at several credit inquiries, like requests for an increase in credit limit, new account openings, and applications for new financial products. These inquiries often ding the credit score, so only apply for your genuine need to avoid score hampering. Additionally, if you have a good credit score, there might be a possibility that issuers will deny you if you’ve currently opened multiple accounts.
3. Review Your Credit Score
The most important step in improving credit scores is reviewing them. It helps you know what might be working in your favor. That’s where the role of reviewing credit history comes in.
Factors that mainly contribute to a good credit score include a mix of distinct credit card and loan accounts, fewer inquiries for new credit, a history of timely bill payments, older credit accounts, and low balances on credit cards. High credit card collections, judgments, balances, and missed or later-on payments are the main credit score detractors.
4. Set an Autopay or Calendar Reminder
If you do not remember the days and dates of making monthly payments, you can easily fix this issue by setting up an autopay option. If you are unsure about paying your bills, setting a reminder could work for you, and you just need to pay less.
Most providers ask you to set up an autopay option that automatically withdraws from your savings account (or charges your credit card). Some student loan companies offer discounts on interest rates.
If you do not want to set up autopay, you can set up a reminder. Many card issuers and banks grant you to schedule reminders via websites, including push notifications and email reminders.
5. Get Credit for Paying Cell Phone Bills and Monthly Utility on Time
If you’re concerned about paying your cell bills and monthly utilities on time, you should check out Experian Boost. It is an easy way to improve credit score. Connect your bank account to Experian Boost and let it examine your utility, streaming, and telecom service payment history. After verifying the data, confirm that you want it added to your Experian credit file. You will get an updated score delivered in real time.
6. Pay Attention to Your Credit Utilization Rate (CUR)
Your CUR is the total balance of your credit card dividend by your total average credit. If your CUR is beyond 30 percent and you don’t have any problem paying your bills in full and on time, you can contact your card issuer and demand an increase in the credit limit. It benefits your credit utilization till your balance does not rise in tandem.
7. Make the Most of a Thin Credit File
A thin credit file means you do not have much credit history to generate a credit score. Sixty-two million Americans are facing the same problem. Luckily, there are numerous ways to increase a thin credit file and get a good score, via Experian Boost, FICO, and paying monthly rent.
For instance, RentTrack and Rental Kharma will report your rental payments to 3 main credit bureaus on your behalf, which could help you score well.
8. Keep Old Accounts Open
The older your average credit age, the more favorable you will appear to lenders. Don’t close the old credit accounts if you are not using them. Though the history for those accounts will be on your credit report, closing credit cards, while you have a balance on different cards, would lower your credit and improve your CUR.
Moreover, if you have delinquent accounts, collection accounts, or charge-offs, take appropriate action to rectify them.
9. Look for Debt Consolidation
If you have a lot of outstanding debts, it could be advantageous for you to take out a debt consolidation loan from a credit union or a bank to pay off them. To deal with it, you’ll just have one payment, and if you receive a lower interest rate, you’ll be in a good position to quickly pay down your debts, which results in an improved credit score and CUR.
10. Restrict Your Requests for New Credit
There are two types of inquiries in your credit history: soft and hard inquiries. A soft inquiry may allow you to check your own credit, checks performed by financial institutions to do business, offer a potential employer permission to monitor your credit or examine whether companies wish to send pre-approved offers.
However, hard inquiries can adversely affect your credit score. These include auto loans, mortgages, applications for new credit cards, and other forms of new credit.
11. Use Credit Monitoring
Credit monitoring is the easiest way to track your progress. Some free services ask you to check for changes in your credit report, like a new account or a paid-off account you have opted for. Furthermore, many credit monitoring services prevent fraud and theft by allowing you to directly contact the credit card company and report the fraud.
Factors That Affect Your Credit Score
Your credit scores are examined by manifold factors, such as timely bill payment and the length of time you have used credit. Knowing what factors affect credit scores aids in planning the most effective way to build credit or safeguard it.
Amongst the various factors that affect your credit score, we’ve curated some of them along with their percentage for you, which are:
- Length of Credit History: 15%
- Credit Mix: 10%
- New Credit: 10%
- Amounts Owned: 30%
- Payment History: 35%
- Types of Credit in Use: 10%
Also, check out this blog: How to Choose the Right Credit Card?
Conclusion
Improving your credit score is a good concern, especially if you’re planning to apply for a loan to purchase a home or a new car or qualify for the best available reward cards. If you want to improve your credit score, consider these 11 best tips we have outlined for you, plus the factors that affect it.
The process can take a few weeks or months to see an impeccable impact on your score, turning it in your favor. So keep calm and wait for the excellent results to fall into your bucket.
