Ways to improve your credit score

Credit scores are important. They're used by lenders to determine whether or not you're a good candidate for a loan, and can affect the interest rate you're offered. A good credit score can save you thousands of dollars in interest over the life of a loan. A bad credit score can cost you a loan altogether.

There are a number of things you can do to improve your credit score. Here are a few of the most effective:

Check your credit report for errors

One of the best things you can do to improve your credit score is to check your credit report for errors. You're entitled to a free copy of your credit report from each of the three major credit reporting agencies once per year. Check it carefully for any errors, and dispute any that you find.

Make all of your payments on time

One of the biggest factors in your credit score is your payment history. Make sure you pay all of your bills on time, every time. Set up automatic payments if you have to, to make sure you never miss a payment.

Keep your credit card balances low

Your credit utilization ratio is the amount of credit you're using compared to the amount of credit you have available. It's a good idea to keep your credit utilization ratio below 30%, but the lower the better.

Get a mix of different types of credit

Having a mix of different types of credit is good for your credit score. Having just one type of credit, like a credit card, can make up 10% of your credit score. So, if you can, get a mix of credit types, like a credit card, a car loan, and a mortgage.

Keep old accounts open

The length of your credit history makes up 15% of your credit score. So, it's a good idea to keep old accounts open, even if you don't use them.

Use credit counseling services

If you're having trouble managing your debt, you can use credit counseling services. These services can help you create a budget, and can negotiate with your creditors to lower your interest rates and monthly payments.

Credit counseling services can be a good way to improve your credit score, but make sure you choose a reputable service. Avoid any service that promises to "fix" your credit score, or that charges upfront fees.

Improving your credit score can take time, but it's worth it. A good credit score can save you thousands of dollars in interest over the life of a loan, and can help you get approved for the loans you need.

Posted on Mar 16, 2023, in Credit