A (Relatively) Painless Guide for Improving your Credit Score
If your credit score is lower than desired, take heart. There are many ways in which you can begin rebuilding your credit and redeeming your credit score.
Your credit score is incredibly important, as it will determine your eligibility for certain types of loans and credit, and will be a big determining factor when it comes to competitive rates.
- Pay all of your bills on time – OK, so this may sound like simple advice, but it is still worth mentioning. Many people think that paying a few bills late here and there will not affect their credit score but, in reality, it can lower your credit score quite a bit. If you have trouble managing your monthly bills, consider signing up for online bill payments, either through your bank or through your creditor. This will allow you to set up payment dates and amounts, thereby ensuring that your bills will be paid on time, each and every month.
- Order a copy of your credit report – It may be a bit painful to look at your credit report, but it is necessary for rebuilding your credit. Take the time to thoroughly review your credit report from all three credit reporting agencies and check for errors. Errors and discrepancies can be quite detrimental when it comes to your credit score, so immediately report any problems to the appropriate agency.
- Check your debt-to-income ratio – How much of your available credit are you currently using? Much of your credit score is determined by your available credit, also called your debt-to-income ratio. For example, if you have a credit card with a $9,000 balance and your limit for that card is $10,000, you will likely have a very high ratio. The best way to combat this ratio is to pay off your credit cards and keep your credit lines open. In addition, it is best to avoid canceling any credit cards, as this lower your available credit and subsequently lower your credit score.
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