Are you getting ready to apply for a mortgage or loan? Then you might want to look at your credit score and ensure that it's the highest possible. 

Your credit score is one of the most crucial measures of your financial wellbeing. It is what tells lenders how responsibly you use your credit.

The higher it is, the more likely you are to get credit at the best rates. The score is based on factors such as payment history, the current amount owed, and credit history. 

There are various ways to improve your credit score, and we'll get to them in a moment after we look at why it matters to have a high one.

Why Does a Good Credit Score Matter?

An excellent credit score will save you a lot of money when applying for loans. This is because you get the best rates on loans, mortgages, and everything that needs financing. 

Banks also consider individuals with higher credit scores low-risk borrowers and more of them compete for their business by offering better interest rates and fees. Conversely, poor credit ratings make you a high-risk borrower and affect your ability to rent a house, car, or even get life insurance. 

Improving Your Credit Score

Improving your credit score takes some effort and time, but it will ultimately prove worthwhile. Here are several ways you can do it.

1. Review Your Credit Reports

It is crucial to understand what works in your favor or against you as you look to improve your credit score. This is why you need to pull a copy of your credit history at least once a year from the leading credit reporting agencies - Experian, Equifax, and TransUnion. 

Ensure that everything is in order and there are no errors, as some factors such as on-time payments, low credit card balances, a mix of different credit card and loan accounts, and minimal inquiries for new credit will contribute to a higher credit score.

However, if you have a high credit balance or missed payments, you may need to work on that, as it may hurt your credit score. 

2. Pay Bills on Time

If there's anything you could do better to improve your credit score, it would be making your payments on time.

This is because your payment history directly influences your credit score and, consequently, your ability to get loans. However, we can all agree that sometimes you may be overwhelmed by all the bills you need to pay and end up missing some.

To address this issue, try creating a filing system to keep track of monthly bills. Alternatively, setting up automatic payments can also help you avoid missing deadlines and getting reported to credit bureaus. 

3. Aim For Less Credit Utilization

Credit utilization is simply the amount of credit limit that you are using at a given time. It is a crucial factor in determining your credit score. The simplest way to manage your credit utilization is by paying your credit card balances in full every month and keeping your balance at 30% or less of your total credit card limit. You can use your credit card's high balance alert feature to help you maintain a utilization. 

Improving your credit score is a good goal to work towards, more so if you're planning to apply for a loan or make a large purchase. It usually takes time to improve, but the results will prove worth the time and effort. The sooner you start working on your credit score, the better.