These days, credit score is of vital importance in case you need to buy a house, a car, or something else. Now the million dollar question is how can you improve your credit score? Although, there is no magic required to improve your credit score but some self-discipline, motivation and proper planning can help you raise your credit score.
It’s a marathon, not a 100-meter race
Just remember that you will be able to improve your credit score over a period of time. So be patient and start working gradually. You might be able to raise credit score up to 200 points within three years if you take the right steps. Of course, it is possible that some people will not achieve this number. It is entirely in your hands.
Pay monthly bills on time
In order to maintain a good credit score, what you need to do is pay monthly bills on time. Even a slight delay can cause a few points to be deducted from your credit score. That’s why it is important that as soon as your bill reaches your mailbox, pay it immediately. If possible, you can also register for automatic recurring payments.
Don’t charge over 25% of your credit limit
In case you are just about to start and have a meagre credit report, think about opening one or more credit accounts. Don’t go above 25% of the credit limit and always try to pay your balance in full, if possible. It is not required that you overdo it but it is a healthy habit to maintain accounts which will later on help you build a higher score.
Keep balances low
Just keep your balances low at all times and keep within the 25% range, if possible. In case it goes over this limit, then stop charging and try to pay off your debt first.
Negotiate a lower APR
If you are a regular and a loyal customer for some time then you can ask the customer service to negotiate a lower APR. This may take some effort and persistence but is theoretically possible.
Check your credit reports
Carefully study the credit reports from Equifax, Experian, and Transunion and check each and every entry on the report. If you find any inconsistencies, then go ahead and dispute them. Once it gets fixed, you will be delivered an updated report.
Don’t close all your paid accounts
There is some debate on this one and we have heard different opinions. It is not necessary that you close all the accounts that you are not using. Keep the ones which you have had the longest. Its advantage is that it will make you more credit worthy because the duration of credit history plays an important role in credit score.