Clever Ways to Improve Your Credit Score

Your credit score will impact many elements of your life in unexpected ways. For example, the 37% of home buyers represented by millennials may have a bad credit score that affects their ability to buy. Thankfully, there are ways to boost your score that take minimal effort and may not cost you much. Here are just a few to consider.

Decrease Your Utilization Ratio

Your utilization ratio indicates how much of an account that you have used. For example, if you have a card limit worth $5,000, and you owe $2,500, your utilization ratio is 50%. If you take the time to pay off as much of this as possible, you can significantly increase your score. In some cases, this could help your score jump up by as many as 15-20 points, depending on how much of your ratio you decrease through on-time, full payments.

Consider Buying a Home

As mentioned earlier, a poor credit rating could impede your ability to own a home. But did you know that the act of buying a home could improve your score? Obtaining approval to buy a home can immediately boost your score in many ways. You can also get a similar boost if you buy a car and get a loan for it. But if you’re among the 32% of buyers buying a home for the first time, you may find this step harder and more complex, so get help from a professional if this is your goal.

Increase Your Credit Limit

Did you know that you can request an extension on your limit? Many people don’t realize this and keep their initial amount. It could be wise to increase your limit because it immediately improves your utilization ratio. It also helps to improve your score by expanding your available options. Don’t ask for one huge boost at one time, though. Instead, ask for small increases every six months over a lengthy period.

Don’t Ignore Potential Errors

Your report is not perfect and may have many errors spread throughout. For example, someone with a similar name may owe money to a collection agency, which may end up on your reports. Use free websites to check for errors and report them immediately if you spot one. Your company will work with you to fix these problems and ensure that your report and score are as accurate as possible.

Pay Your Bills on Time

It may seem obvious, but so many people don’t seem to realize this vital fact. Over one-third (35%) of your credit is chosen based on how promptly you pay your bills. If you have a hard time remembering to pay your bills, set up an automatic payment. And always try to pay more than the minimum. If you can, pay in full. Doing so will help to pay off your bills that much quicker and avoid long-term problems.

Invest in Paying Off Your Debt

When you get your tax return, don’t spend it on going on vacation or buying things you don’t need. Instead, take that money and attempt to pay off as much of your debt as possible. As your debt load lightens, your score will improve because you’ll be making more money than you owe. In this way, you should have little difficulty boosting your score.

Consider a Boosting Service

If these steps don’t seem to increase your credit to your liking, you may want to consider a boosting service. This type of help takes a look at your account and tries to find ways to help you out. For instance, they can report your utilities and cell phone payments and use them as positive proof that you can pay bills on time.

It’s never too late to improve your credit score and improve your financial future. What few people realize is that these steps may take a little time to become active. For example, paying off a collector may take two months or more to show up on your report. So don’t worry if you don’t see an immediate boost after each step. Just keep at it and you’ll be able to gradually improve your score over time.