10 Ways to Boost your Credit Score

A good credit score contributes greatly to your financial health. It is what informs lenders how responsible you are. The better your credit score, the easier it is for you to be approved for new loans. A high credit score opens doors for lower interest rate loans when you want to borrow.

That's why developing an above-average credit score should be every consumer's priority. In as much as this journey is not easy, it’s quite possible. You can build your credit score from scratch or rebuild it. Whichever category you are in, it is imperative to learn how you can boost the scores and how they’re calculated. The journey requires patience and lots of effort. Below we bring to you 10 ways you can improve your credit score.

1. Reviewing Your Credit Reports

Reviewing your credit reports once a year is one of the best exercises if you want to boost your scores. You can access free reports through the official AnnualCreditReport.com website. Alternatively, you can get a copy of your credit report from the three main credit bureaus. These are TransUnion, Equifax or Experian.

Reviewing your credit report tells you what’s affecting or improving your score. Different factors can affect your credit score. Some of these include;

Low balances on credit cards
A history of on-time payments
Multiple different loan accounts and credit cards
High credit card balances
Missed or late payments

2. Timely Bill Payments

Always avoid late payments. This is one of the most straightforward methods of boosting credit score. There are different ways you can do this. For example;

Create a filing system, either digital or paper. This helps to keep track of monthly bills so that you can pay them on time.
Set due-date alerts. This helps you know upcoming bills.
Automating bill payment from your banks. Charge all monthly payments to your credit cards.

3. Increasing Your Credit Limit

There are two ways you can increase your credit limit. Either open a new card or ask for an increase on your current credit card.

You can also make monthly payments towards your balance. This way your balance remains low and help track your spending. It helps to pay off a part of your debts, yet, it's much convenient to clear the whole balance. This has the fastest and biggest impact on your credit score.

Before you ask for a credit limit increase, make sure to spend what you can afford to pay off. Do enough research if you’re considering opening a new credit card. Also, make sure you don't apply for too many credit cards in a short period of time as it may raise red flags.

4. Merge Your Debts

It could be to your advantage to clear outstanding debts. Take a debt consolidation loan from a credit union or bank and pay them all off. After which you’re left with one payment to handle. If you’re in a position to get a lower interest rate on the loan, you’ll be able to pay your debts faster.

In so doing, you’re improving your credit score. You could also merge credit card balances by paying them off with a balance transfer credit card. Usually, these cards charge 0% interest on your balance during promotional periods.

5. Use Credit Monitoring Services

An easy way to track how your credit score changes over time is by using credit monitoring services. Many of these services are free. Credit Monitoring helps are updated on monthly basis from Experian, TransUnion or Equifax. So, you can track your credit reports such as a new account or a paid-off account etc.

6. Building Your Credit File

The first step in building your credit file is reporting all your new accounts to the major credit bureaus. Having several open and active accounts is very helpful. Secured cards or credit-builder loans are also a great way to start out when you have a low score.

You can also have a great rewards credit card with no annual fee if you want to improve an established good score.

Even better, if an authorized user added you to their credit card, the greater the chances of building your credit file.

7. Don't Miss Payments

Your payment history determines your credit score. Having a long history of timely payments helps you achieve an excellent credit score.

To achieve this goal, make sure you don’t miss credit card payments or loans by more than 29 days. Late payments can cost your credit score if reported to the credit bureaus.

8. Catch Up on Outstanding Accounts

Always clear outstanding bills. This stops late payments charges to your credit history. Improving your credit scores is very easy when your payments are always timely. Clearing your outstanding debts is very effective hence improving your credit scores.

9. Make frequent payments

Making small payments is better than waiting for your credits to accumulate. If you pay in small amounts, that influences your score as your credits will not build up.

By viewing your credit profile with Nerd Wallet, you’re able to keep track of your monthly payments.

10. Don’t Apply for New Accounts

Limit how often you may want to submit credit applications. New applications lead to hard inquiries, which may tarnish your credit scores in the long run. There’s no limit about how many accounts you can apply for, but, it’s advisable to be cautious.

Conclusion

When improving your credit score, always remember your credit journey is unique. It’s a great life goal especially if you plan to apply for a loan soon. It may take between weeks to months, so patience is vital. Don’t forget to always pay your bills on time to avoid downward scaling of your credit scores.

Disclaimer

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