If you have one or more credit cards, you probably have a credit score. This is a number that summarizes your credit history, and it’s based on the information in your credit reports (the detailed records that creditors keep about how much you borrow and how well you repay). There are several different types of credit scores, but most major lenders use the FICO scoring system. You get a score, generally between 300 and 850, from each of the three major consumer credit bureaus:
Experian, Equifax, and TransUnion. The higher your score, the better your credit looks to lenders. And, the better your credit looks to lenders, the more likely they are to offer you lower interest rates when you need to borrow money
Why your credit score matters
A credit score is an indicator of the likelihood that you will pay your debt obligations. Your score is derived from information contained in your credit report. The higher the number (700-850), the better your score.
Lenders use this number to determine whether they want to extend a loan to you and at what interest rate.
Given that your score may not be good, you may be wondering: How can I improve my credit score in 2022? Is there a way to repair the damage and get you to the good books?
Get a copy of your credit report
It is important to get a copy of your credit report to ensure it is accurate. If you find any inaccuracies (like a suspicious credit account you didn’t open), dispute such fraudulent activities with the appropriate credit bureaus to have them removed.
The best way to do this is through AnnualCreditReport.com. You can get one free copy annually from all three major reporting agencies (Equifax, Experian, and TransUnion).
You can also consider ordering a copy every few months since one agency may have information that another doesn’t. This way, you can monitor your progress as you work to raise your score.
If there are negative marks in your history that are valid, it is still possible to raise your score over time. You will need to be proactive and responsible in managing your debt going forward. What are things you can do to improve your credit score?
How to improve your credit score
Consider a balance transfer
If you’re carrying a lot of debt and you are wondering about how to improve your credit score in 30 days, then paying off your debts should be your top priority. You might want to consider a balance transfer card that charges no interest for a period of time, allowing you to pay down debt faster.
Lower your credit utilization ratio
One easy way to improve your score is to lower your credit utilization ratio (the percentage of your total credit limit you have used). If you can get it below 30%, that’s a great start. But if you can reduce it further, such as by paying off some debt or asking for an increase in your limit, do so and watch your score climb even more.
Limit your credit card application
It’s best not to apply for new cards unless there’s a good reason, such as better terms on a balance transfer or a rewards rate. Applying for multiple cards at once can be seen as a negative. It suggests someone desperate for money. Instead, apply only when you have a good chance of approval.
To improve your credit score:
- Pay down your debt
- Be sure you are paying all of your bills on time
- Check your credit report for errors
Pay bills on time
If you want to get your score moving in the right direction, take care of every little detail, especially your bills! Since bills might slip your mind at times, set up autopay on your credit accounts. This helps you stay on course even when you may be too busy to remember.
Become an authorized user
A close friend or family member can add you as an authorized user on their cards. You don’t need to have a card. This enables you to raise your score. However, ensure the cardholder uses the card responsibly so your score doesn’t sink any further.
Consolidate your debts
Consolidating all your debts into one monthly payment can help improve your credit because you are making only one payment. For example, if you have five loans with different due dates, it’s easy to forget to pay one or confuse the due dates.
Not only does consolidation help simplify monthly payments and make them easier to manage, but it also helps prevent late payment charges, which lower your score. The longer you make payments on time, the better the effect is on your credit history.
Do not close old accounts
Lenders favor old credit account holders. This is because your credit card gives them a detailed history of how you pay your debts. Closing credit cards while still having balances on other credit cards negatively impacts your credit score. This could knock off a few points because of the increase in your credit utilization ratio.
Advantages of improving your credit score
Lower insurance premiums: Companies that offer home and auto insurance often base their premiums on an applicant’s credit score. The better your credit, the less you may have to pay for insurance.
Easier time finding a place to live: Many landlords check prospective tenants’ credit scores as part of the application process. If they see something they don’t like, they might not approve your rental application.
Lower loan rates: If you’re getting a mortgage, car loan, or any other type of loan, a poor credit history could increase the amount you pay in interest and fees or prevent you from getting approved altogether.
Better employment prospects: Some employers pull applicants’ credit reports as part of their background checks. If your report shows you are poor in managing your finances, they will not trust you with their jobs.
Negotiate for better interest rates: Banks are happy to offer you loans when you have a good credit score. Banks and credit companies are always on the lookout to find borrowers with good credit scores. This puts you in a position to negotiate for better interest rates. You will also obtain a mortgage with more favorable terms.
Credit scores matter. Even a difference of a few points on your credit score makes a big difference in the interest rate you pay when you borrow money. A high credit score lets you take advantage of better credit card offers and gets more attractive deals on mortgage, car loans, and insurance.
Because a good score saves you so much money, it’s worth taking steps to improve a poor credit score over time.
A more positive outlook toward a more financially secure future starts today. Give the Ascent Network a call today at 1-877-871-2400. Ascent Network helps consumers all over the United States and is available locally in Huntington Beach, CA, Coachella Valley, Palm Springs, Cathedral City, Rancho Mirage, Palm Desert, Desert Hot Springs, Indian Wells, La Quinta, Indio, and Thousand Palms.