Are you unhappy with your current credit score? Or, are you like the 59.1 percent of Americans who have no idea what their credit score even is?
It doesn’t matter if you know your credit score is not up to par or you have no idea where you currently stand. Neither situation is a great one in which to find yourself.
Luckily, though, there are things you can do to fix your financial situation and improve your credit score.
Listed below are nine tips that will help you through the process of building your credit score.
What Is a Good Credit Score?
First, let’s go over the different credit ratings and what kind of credit score you should be aiming for.
Credit scores are typically broken up into the following ranges:
- 300-579: Very poor
- 580-669: Fair
- 670-739: Good
- 740-799: Very good
- 800-850: Excellent
If you’re currently in the “Poor” or “Fair” range, it would be a good idea for you to try to raise your score to “Good” or above.
Why Does Your Credit Score Matter?
Your credit score tells lenders that you’re a reliable or unreliable borrower.
The better job you do of making your payments on time, the higher your credit score will be. If you have a high credit score, lenders are more likely to loan you money at lower interest rates.
A high credit score also shows lenders that you are capable of living within your means and don’t make a habit of borrowing more than you can pay back.
It doesn’t matter if you’re a young bachelor or bachelorette or if you’re married and in the process of planning for a new baby. Everyone ought to be taking their credit score seriously and doing their best to raise it as much as they can.
Nine Tips for Building Your Credit
Now that you know a bit more about what makes a good credit score and why your credit score matters, it’s time to focus on how you can start building your credit back up.
Here are nine simple tips that will help you raise your credit score and begin your journey toward financial freedom:
1. Learn Your Credit Score
If you fall into the camp of people who don’t know their credit scores, this is a good place to start.
Once you have a copy of your credit report, you’ll be able to check your score. You’ll also be able to check for errors that could be bringing your score down.
If you notice any errors (misspelled name, incorrect birthday, debts that you know you’ve paid off, etc.), get them fixed right away.
2. Keep Your Credit Card Balance Small
If credit card debt is holding you back, your next step ought to be working on paying down your credit card balances. Keep your balances small–under 30 percent is ideal.
If you can, pay your balance off in full each month. It’s a myth that leaving a balance behind is a good idea. If you can pay it off, pay it off.
3. Get Credit for Paying Other Bills on Time
You can work with the credit bureau, Experian, and sign up for their Boost program. This allows you to get credit for paying your utility bills and cell phone bill on time each month. This is a free program and a great option for people who need help building credit.
4. Don’t Get Rid of Old Debt
If you have old, paid off debts on your credit report, don’t cancel those accounts. This will affect your credit history and could negatively affect your credit score. Remember, the longer your credit history, the better.
5. Don’t Drag Out the Loan Application Process
When you’re applying for loans or credit cards, try not to drag out the application process too much.
The more time you spend having your credit checked with these applications, the lower your credit score will be.
It doesn’t look good to the credit bureaus if you’re constantly trying to borrow more money.
6. Pay Your Bills on Time
This might seem obvious, but it’s a challenge for a lot of people. Make sure you’re paying your bills on time each month. If this is hard for you, set up automatic payments or set reminders on your phone so you don’t forget.
7. Clear Up Collection Accounts
If you have accounts in collections, make it a priority to pay those off first. Sometimes, you can work with debt collectors to get these debts paid off sooner. They may even be willing to stop reporting your debt to credit bureaus if you can pay the debt off in full.
8. Use a Secured Credit Card
A secured credit card is a great option for people who have low credit scores, as well as those who don’t have a credit score at all. To get this kind of card, you have to pay a deposit up front. That deposit then acts as your credit limit.
This is a very low-risk option. It’s also good for people who are just starting to build credit or can’t get approved for other types of credit cards or loans.
9. Work with a Professional
Finally, you might want to consider working with a credit repair service like CreditReps.
These businesses will help you work on consolidating your debt and will put together a plan to help you pay off your credit cards and improve your credit score.
Many of these businesses offer a free audit or consultation to let you know where you currently stand and how they can help you.
Looking for More Financial Advice?
You might not be happy with your credit score now. But, that doesn’t mean you’re stuck with a low score forever. Put these strategies into practice and you’ll soon be able to start building your credit.
Once you’ve raised your credit score, you’re most likely going to want to keep it raised.
In order to do that, you’ll need to avoid overusing your credit cards, even in emergency situations. But, how else are you supposed to get money when problems arise?
Check out this article on simple (and legal) ways to get quick cash today. These tips will help you get the money you need without hurting your credit score.