Credit scores are based on several different aspects of a person's ability to handle credit. Here the top five ways to improve your credit score.
1. First and Foremost, Pay on Time.
When considering your credit score, the biggest thing they look for is punctuality. You MUST make your monthly payments on time if you want to have a good credit score.
Paying on time shows that you are trustworthy with credit. If your credit score is low because of missed or late payments, you will often not qualify for credit cards or loans in the future.
2. Simply Have Credit Cards.
What can build your credit score the most is the usage of your credit cards... that is, only if you play by the rules. Having credit cards can only benefit your credit rating if you pay the minimum amount required, pay it on time, and don't spend beyond your credit limit.
It's like exercise. If you exercise the right way, you can build your muscles.
If not, you can damage them. The same is with your credit history. If you use your credit cards wisely and pay back the money you owe, your credit score will thrive.
3. Pay Your Balances Regularly
Having a low balance on your credit cards constantly is a great way to improve your credit score. Paying off your credit card debt before it gets too high will show creditors that you really can pay it all back, and that you are responsible enough to not even come close to going over your credit limit.
4. The More You Have, The Bigger Risk You Are
Creditors often see people with a lot of credit cards as potential threats because they have more spending opportunity. Having too many credit cards can bring your score down. How many is too many is up to you, but keep in mind that the more buying power you have, the more you have to prove you can pay for what you buy.
5. Don't Get Rid of Old Accounts.
Old credit cards are beneficial to you because they show that you have a long, and hopefully healthy, credit history. Even if you do not have such a great payment history with these old cards, you are better off leaving them open.
Just because you close old accounts doesn't mean that the mistakes you made on those accounts will go away. They can stay on your credit report for years.
There are a few tips you might also take into consideration when trying to raise your credit score: - Checking your credit report can allow you to see what areas you need to improve on, and what you're doing well that you should keep up.
- You should also have savings and checking accounts in the bank, and regulate them wisely. Creditors see this as a sign of stability.
- Cosigning on someone else's card can be beneficial also, but only if you and the person you're signing with are responsible. Otherwise, there are potential dangers that will actually lower your credit score.
