This post is sponsored by CreditRepair.com
Are you apart of the almost 30% of Americans who have poor credit? Have you ever even checked your credit score?
First off, let's start with the basics of what a credit score is and why it's crucial for a healthy financial life.
A credit score is a three-digit number made by an algorithm generated by information in your credit report.
Your score is determined by a few things:
- Payment history
- Amount owed
- Length of credit history
- New credit
- Types of credit used
There's no definitive rule on what a good credit score is, but 700+ is generally a good rule of thumb.
Improving your credit score is incredibly beneficial when it comes to buying a house, finding a job, and even selecting a credit card.
Here are just a few reasons why having a good to excellent credit score matter:
- Better interest rates on loans (potential savings of thousands)
- Higher chance of getting selected for a house or car loan
- Larger selection of credit cards with great signup bonuses
- Some employers conduct a credit check during the hiring process
Although you can't fix your credit score in 30 days, you can slowly improve your score over time, which will help you save a lot of money on interest rates.
Here are five simple tricks to use to improve your credit score.
1. Correct any mistakes or errors
One of the most essential things anyone can do to repair their credit is to start by checking for errors on their credit report.
Is all of the information on the credit report correct? Are the accounts listed yours?
Does your credit report say that you have made late payments when you in fact never have?
These are a few of the many things you should check when going through your credit report. Mistakes are not uncommon.
If you see a mistake, dispute the error. Wherever you ordered your credit report will tell you the instructions on disputing it. This can be done by mail, online, or by phone.
2. Seek out help
CreditRepair.com is an online service that can help you improve your credit score with guided assistance.
Previous members have seen an average credit score gain of 40 points in 4 months, as well as 7% on average of questionable credit report negatives removed.
These are just a few of the tasks CreditRepair.com helps with:
- 24/7 credit report monitoring and alerts that will keep you aware of any changes or updates on your report
- Provides customized information on how the reported items affect your score
- Customized tools and technology to help guide you through what to do to accomplish your credit score goals
- Interact with credit bureaus and creditors to challenge negative report items that affect your credit score
3. Don't get close to your credit limit
Do you know your credit utilization ratio?
Credit utilization ratio refers to the amount of credit you've used, divided by the total amount of credit you have left.
It's recommended to keep your credit utilization ratio below 30%.
For example: if your credit limit is $10,000, you wouldn't want to spend more than $3,000 on your credit card.
To avoid a high credit utilization rate, spread out your spending among different credit cards.
Make sure to pay off your credit card in time and keep the spending below 30% of the credit card.
4. Never miss a payment – better yet, set up autopay
Setting up autopay will automatically transfer however much you want to pay on your credit card each month.
This will allow you to pay every single month without even thinking about it, which also leads to fewer late payments.
Late payments will decrease your credit score and impact the score for years to come. Don't make a silly mistake such as forgetting to pay a payment.
5. Increase your credit limit
Instead of increasing your spending on credit cards, increase the credit limit on your credit cards.
Increasing your credit limit will also increase the credit utilization ratio. This is a smart idea only if you're able to spend responsibly.
Credit utilization ratio refers to how much you've spent on your card versus the credit card limit.
A good rule of thumb is staying under 30% of your credit card(s) limit, as it shows that you can pay off your credit card without any issues.
Though it may take some time to improve your credit score, it's a wise idea to get started today if your credit score is poor.
A low credit score can lead to you paying more in insurance premiums, as well as loan interest rates on your house and car. Improving your credit score will also teach you basic fundamentals on saving money, which is a valuable asset to have throughout your life.
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What have you done to improve your credit score?
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