Credit can seem to be this confounding beast that few people understand. But it’s not nearly as perplexing as you might think. Learn how to improve your credit score with these simple tricks.
Reduce Credit Card Balances
One of the best ways to improve your credit score immediately is by paying down your existing credit card balances. Nerd Wallet advises that you don’t try to pay them all down to zero, but that you take your time and make larger payments instead. Doing so will let you cash in on the point increases the closer that your balance get to being under 20% of your credit limit. Banks typically like to see the balances under 20% to assure that you are a “responsible borrower.”
Utilize Credit Lines More Often
If you have lines of credit going unused, you may want to rethink that. Aged lines with no usage can sometimes be canceled by banks. What’s more, other banks may not be so apt to lend to you if you never use the existing lines that you have. Avoid having too many lines, but make small purchases with those other lines here and there. It will report to your credit that you had a balance and paid it off, which always helps.
Eliminate Reporting Inaccuracies
Check your credit report often. Free services like Credit Karma let you check your score as often as you like with no fees. You’d be surprised at how many inaccuracies you might find. For example, I had a balance of $7k showing from a Wells Fargo card I never took out. It was killing my credit score. When I disputed it, thinking it was fraud, it turned out to be someone with a very similar name and a reporting error. Once corrected, this added about 30 points back to my credit score.
Avoid Late Payments
One of the very worst things that you can do is pay your credit accounts late. A late payment report can stay on your credit for years and can tax your point tally. Creditors will be wary to lend to you because of fear that you won’t pay them back and will default. If you do not do anything else in this list, by and far, always pay your bill on time. And a last word of parting advice is: pay a bit more than the minimum balance due, which will show up favorably on your credit report, too.