Best Ways to Improve Your Credit Score

Your credit score is incredibly important. It’s what lenders use to determine whether or not to approve you for a loan. A low credit score indicates to them that you may not be financially stable or that you aren’t financially responsible. As such, they may not approve your loan because they’ve identified you as a risk, meaning that you might not pay back your loan on time or in full. It’s why you should keep a close eye on your credit score. Unfortunately, things can happen that can cause your score to drop. If your score is somewhat low, then you’ll have to work on improving it. With that in mind, the following are the best ways to improve your credit score:

Pay Your Bills on Time

Late payments and missed payments are going to hurt your credit score. This is especially true if your unpaid debts go to collections. To prevent this from happening, set up automated payments for your bills. This ensures that money from your checking account is automatically withdrawn to pay for your bills so that you’re never late.

Apply for a Credit Card

If you’ve never had a credit card before, then you should apply for one. Using your credit card won’t automatically hurt your credit score. In fact, having no credit tends to be worse. Just make sure that you keep your balance low. If you’re just trying to build credit, use your credit card for small purchases and just pay it off every month.

Keep Your Credit Utilization Low

You should keep your balances as low as you can. If your balance is too high, it will result in a high credit utilization ratio, which can hurt your score. Basically, a high credit utilization score indicates that you owe a lot of money already or that you’re using more credit than you can afford to pay back right away. Because of this, try to keep your credit utilization below 30 percent.

Limit Your Credit Inquiries

Don’t try to open too many credit cards or apply for too many loans. Doing so will result in an abundance of credit inquiries, which will ding your score.

Keep an Eye on Your Credit Report

Request a credit report from one of the three major credit bureaus. You’re entitled to one free report a year. Look for inaccuracies and report them. If they were mistakes, they will be removed, which can help improve your credit score.

Keep a Mix of Credit Accounts

Your score will reflect your ability to maintain all types of credit accounts, which means having a variety of credit accounts will be beneficial. If you only have a single credit card account, you might want to take out a small loan for something. Car loans, home mortgages, personal loans, and more can all help improve your credit score (they don’t count against your credit utilization) as long as you pay them on time.

Become an Authorized Credit Card User

If you don’t have any credit or are rebuilding your credit, consider becoming an authorized user on someone else’s credit card, such as a family member. Just make sure that they have good credit themselves. This way, you can benefit from their good credit history, helping to boost your own credit score. Of course, if they don’t use their card responsibly, it could hurt your score instead.

These are a few of the best ways to improve your credit score. Not only will you be more likely to be approved for certain loans the better your credit score is, but you’ll be more likely to qualify for better terms, which means that a higher credit score can help you save money over the long term. For information about applying for and qualifying for a mortgage with your credit score, contact us at Equibox Mortgage today.

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