Millions of Americans have an other-than-stellar credit rating, and the vast majority would like to do more to improve it. The general question, though, is, “how?”
Even though you’re likely fighting inflation and concentrating on other aspects of your finances, there are some pretty easy things you can do that can help improve your credit score. Take a few minutes to review this article, and you may pick up a few tips that can make a big difference.
1. Credit Utilization
While paying bills on time is the most significant factor in your credit score, how you utilize your credit is the second. Credit utilization simply means the portion of your credit limit that you’re using. As a general rule, try to use 30% or less of the credit limit on any card, and if you want to compete with the people with the highest credit score, shoot for less than 7%.
Companies like Midland Credit Management generally recommend that you prioritize paying down the credit cards closest to their limits. You may also want to find out if your provider offers alerts to inform you when the account balance hits a certain amount so you can immediately make a payment to keep it below that threshold. This is one of the quickest ways to positively impact your credit score because once they report the lower balance to the credit bureaus, it’s used to recalculate and (hopefully) improve your score.
Lastly, when you’re looking for financial help, consider asking your credit card provider for a higher credit limit, as this will help improve your credit utilization.
2. Dispute Any Reporting Errors
Mistakes happen, but ones on your credit reports can be highly detrimental, and disputing them can quickly help improve your credit score. By federal law, each of the three major bureaus (Equifax®, Experian®, and TransUnion®) provide free credit reports that you can check as much as once per week.
Use this opportunity to check for mistakes, such as late payments being incorrectly marked as late, negative information that is too old to be listed, or even credit activity that isn’t yours.
3. Get Secured
Using a credit card backed by an upfront cash deposit is another way to improve your credit score. Secured credit cards are used just like a normal one, but your limit is subject to the amount deposited in your account, and those “on-time” payments can help build your credit.
Just be sure to look for one that reports to the major credit bureaus.
4. Rent
All three of the major credit bureaus will include rent payment information. The trick is to make sure they receive it. Companies like RentReporters.com, LevelCredit, and PaymentReport, are among several that will report rent to the major bureaus. Piñata is a free service that reports to TransUnion with an option for your landlord to partner to ensure that your rent payments are reported to all three bureaus.
5. Last But Not Least
This should be a given, but just as you have anxiety about taxes and getting charged with evasion, so you always ensure that they are paid on time, you need to rectify those collection accounts. Paying them off allows you to work with the collection agency to stop reporting the debt and eliminate the threat of being sued.
Improving your credit should be a consistent process. Especially if you want to achieve and maintain the best score possible, utilize the tips above and do a little more research online for additional ideas. If needed, consult a credit professional.
