How To Improve Your Credit Score With These 6 Steps

If you have a low credit score then this can have a devastating impact on your life. It may not have even been your fault. You may have had to contend with some unexpected medical bills for example and this resulted in you experiencing financial difficulties. We will show you how to improve your credit score if you are in this position.

With a low credit score or poor credit history the biggest impact will be financial. You may find that lenders will not offer you any credit. This is because the lenders view a low credit score to mean that you are “high risk” and it will become difficult, if not impossible for you to borrow any money.

A low credit score does not always mean that you will be unable to get credit but it could be expensive for you to do so. Often lenders will charge you a higher rate of interest if your credit score is low. They may also charge you additional fees for any credit. This is not the end of the world but it does mean that your monthly repayments will be higher.

If you have a low credit score then you need to take steps to improve it. Do not believe any advertisements that tell you that a company can improve your credit score overnight. It will take longer than that because when calculating credit score your past financial actions count as well as your present financial position.

1. How to improve your Credit Score by watching your Credit Card Balances

The amount of revolving credit available to you versus how much of it you are actually using is very important when it comes to your credit score. If the percentage is low then you will have a higher credit score. You want to aim for 30% or less.

So what you need to do here is reduce your credit card balances and keep them as low as you can. If you have more than one credit card and balances on all of them then consolidate your credit card debt with a loan or a balance transfer card.

2. Get rid of your Credit Card Balances

If you want to know how to improve your credit score then look no further than your existing credit card balances. If you have a number of small balances on credit cards then pay them off. The more credit card balances that you have the worse your credit score. It is actually better to have a larger balance on one card than smaller balances on multiple cards.

3. How to improve your credit score with timely Bill Payment

If you do not pay your bills on time then this is likely to impact your credit score. People that always pay their bills on time are far more likely to have a better credit score than those that don’t.

We understand that sometimes you need money for other things and this could mean that one or two bills slip. If you have a history of paying your bills late then you have to turn this around. Know when your bills are due and pay them before the due date.

4. Don’t get old Debt removed from your Credit Report

This one is easy as you do not have to do anything. A lot of people make the mistake of thinking that if they have just paid off their car loan or even their mortgage that they need to have these old debts removed from their credit report immediately.

This is not a good idea especially if you paid everything on time. This is known as a “good debt” and will help your credit overall. A long history of good debt will prove that you have taken out various loans and paid them in full on time. A better credit score will result from this.

So whatever you do leave all of the old good debt on your credit report for as long as possible. Future lenders will always be impressed that you have this good debt and improves your credit score. How to improve your credit score the easy way!

5. How to improve your Credit Score by not hinting at Risk

You need to think about whether an action is likely to affect your credit score or not before you go ahead. Two of the biggest factors that affect your credit score are charging a lot more on your credit cards (or paying back less than you normally do) and missing any payments that you regularly make.

Be careful of suddenly using your credit cards for cash advances. This could concern your credit card company as they may believe that your circumstances have drastically changed for the worse. Also don’t use your credit card to pay a divorce lawyer or use it in a pawn shop because this may indicate risk.

6. Make Credit Applications within a short time period

Your credit score lasts for 12 months and each time you make an application for credit this may cause a slight lowering of your score. The reason for this is that if a person makes a lot of applications for credit then the assumption is that they want more credit. How to improve your credit score in this situation?

Make all of your credit applications in one small chunk of time because usually this counts as one credit inquiry. Things are changing in this area though for certain credit applications. If you are buying a home for example then it can take several applications and a lot of time to find the right mortgage deal. This will not impact your credit score now.

Time to improve your Credit Score

So now you are aware of how to improve your credit score. Be sure to pay all of your bills on time and watch for low balances on credit cards too. Do not use credit just because you have it and don’t make risky charges and keep your good debt on your credit record. Follow these steps and improve your credit score.