Top tips to improve your credit score

No matter what your credit score is, most people always have room for improvement. There are many different steps one can take to help improve ones’ credit score. Below are the top tips for improving your credit score. 

Check your credit report

One of the first steps you must take to improve your credit score is understanding what factors are bringing it down. You are entitled to one free credit report a year; it is important to review it annually. Check for potential errors that could impact your score and work to have those errors corrected. Here is a good site to check your credit score

Pay your bills on time

While this may seem like an obvious tip, some people forget to make on-time payments, and their score is brought down as a result. To avoid this, you should set up automatic bill pay to avoid inadvertently missing a payment. 

Consolidate your debt 

If you have any high-interest credit cards and are finding it difficult to pay down the balances, you may want to consider moving those balances to a zero APR card. This will give you a break from the interest charges and allow you to reduce the balance. If you do not qualify for a zero-interest card, you can also take out a personal loan to pay down the balance and make one monthly payment to the lender, which some find easier to manage. 

Pay more than the minimum

It may be tempting only to pay the minimum due each month, but it will not help improve your score over time. Instead, paying more than the minimum is the only way to reduce your debt in a significant way to help bring up your credit score. 

Check your balances and keep them low

It is important to understand each of the balances that you carry monthly on credit cards to make sure you keep them low. As a general rule of thumb, you will want to keep any balance below 10 percent of the limit. So check your balances and make sure you are not over this threshold.

Do not utilize more than 30% of your total credit 

To help your score improve, make sure you are not utilizing more than 30% of your total credit limit. For example, if you have $10,000 in credit, you should not utilize more than $4,000 of it at one time. 

Increase your credit limits

This may seem counterintuitive to help improve your score, but asking for an increase in credit will ultimately bring down credit utilization. The key to this step is not to spend your extra credit! If your current creditors do not increase your limit, you can also open a new account. 

Do not close accounts

One of the big mistakes people make after paying down a credit card is closing it altogether. However, it is important to keep the account open even if you are not using it to help keep your credit utilization score strong, which will help improve your credit score.

Have a mix of debt types 

Overall, people with a diverse credit portfolio tend to have better scores. In addition to credit card debt, it is good to have other debt such as a mortgage or retail store credit cards. Just do not make the mistake of applying for too many new credit lines all at once, as that can negatively impact your score. Do not apply for more than one or two new debts at a time. 

Hire a credit counselor 

If you feel your debt is becoming overwhelming, you may want to hire a third party to help. A counselor can help negotiate your debt and improve your score over time. No matter how low your credit score is, there are always ways to improve. It can take a bit of work and time, but in the end, it will provide you with additional financial freedom and peace of mind.