3 Ways to Boost Your Credit Score
“What’s your credit score?” It’s a question you’re bound to hear whenever you’re about to make a major purchase or financial commitment—and the answer can change your life. Whether it’s for a new car, a credit card, school loans, an apartment or mortgage, or, yes, even your dream job, your creditworthiness is a huge factor in determining both interest rates and overall eligibility.
- Very Good to Excellent credit falls within the 740 – 799 and 800 and up range, respectively.
- The middle 670 – 739 score is simply considered Good.
- Poor to Fair credit is below 579 and in the 580 – 669 range, respectively.
Credit takes years to build, so there’s nothing you can do to improve yours except wait, right? Wrong. Here are three ways you can give your score the boost it needs to secure that lower rate or pass that background check!
Double Check Your Credit Report. Mistakes happen, and even small ones can make a big impact on your score. Thanks to The Fair Credit Reporting Act, you’re legally entitled to a free copy of your credit report from each of the three major bureaus (Equifax, Experian and TransUnion) every 12 months. Use yours to check for inaccurate information, like missed or late payments you can disprove, or outdated negative information, which should be removed seven years after the activity (except Chapter 7 bankruptcy, which takes 10 years). Dispute any errors to the credit bureaus, which must respond within 30 days, and you should notice a bump in your score.
Stop Maxing Out Your Cards. Credit utilization accounts for a whopping 30 percent of your credit score. Even if you make payments greater than the minimum due and never miss a single one, a $5,000 credit card limit with a consistent $4,500 balance will harm your score. This takes into account every line of revolving credit you have combined. It’s an unspoken rule that you should never use more than 30 percent of your available credit. So, if you have another card with a $30,000 limit and an $8,000 balance, it’s actually smarter to pay off that $4,500 balance first because even though you owe more on the higher limit card, this card is using 90 percent of its limit. Another way to make a quick impact on how much of your credit line you’re using is to request a limit increase so your balance equates to a smaller overall percentage.
Make Your Payments. This one may sound simple, and that’s because it is. Thirty-five percent of your credit score is based on your payment history, so it’s vital that you make on-time payments that meet at least the minimum amount due—just $1 less and your score may suffer. If you find yourself short when the bill comes each month due to other financial responsibilities, call your creditor and ask if you can change your due date to a time of month when you tend to have excess income. By making timely payments now, you can start replacing missed payment marks with on-time ones, which can act as a show of good faith to potential creditors and employers.
Your credit score isn’t just a number, it’s the number when it comes to your finances. You may have made some mistakes in the past, but it’s never too late to start improving your score—and your future. Get started by checking your credit score today on Equifax, Experian and TransUnion.