Why is your credit score important: A good credit score is vital for obtaining loans, credit cards, and insurance at favorable rates. Let’s explore how you can improve/maintain your Credit Score in 6 easy steps.
- Check your credit report:
- The first step in improving your credit score is knowing your credit score. You are entitled to one free credit report per year from each major credit reporting agency (Equifax, Experian, and TransUnion). Review your credit report carefully to make sure that all the information is accurate and learn how to improve it.
- Pay your bills on time:
- Juggling your day to day expenses and your bills can be challenging, but late payments can have a significant negative impact on your credit score. This in turn can make it harder to stay economically ahead. To improve your credit score, make sure you pay all your bills on time, and once you are current, stay current, and avoid any lapses.
- Reduce your credit card balances:
- High credit card balances can also have a negative impact on your credit score. To improve your credit score, try to reduce your credit card balances/principles. Ideally, you should keep your credit card balances below 30% of your credit limit.
- Don’t close old credit cards:
- Closing old credit cards can actually hurt your credit score because it can decrease the average length of your credit history. Instead of closing old credit cards, consider using them occasionally and paying them off in full each month.
- Apply for credit sparingly:
- Each time you apply for credit, it can have a negative impact on your credit score. To improve your credit score, try to limit the number of credit applications you submit. Only apply for credit that you actually need.
- Dispute errors on your credit report:
- If you find errors on your credit report, dispute them with the credit reporting agency. You can dispute errors online, by mail, or by phone. Once the credit reporting agency receives your dispute, they must investigate and respond to you within 30 days.
In conclusion, improving your credit score takes time and effort, but it is worth it. A good credit score can help you obtain loans, credit cards, and insurance at favorable rates. By checking your credit report, paying your bills on time, reducing your credit card balances, keeping old credit cards open, applying for credit sparingly, and disputing errors on your credit report, you can improve your credit score and achieve your financial goals.
