A good credit score is a gateway to many financial opportunities in your life. Whether you are looking to purchase a home, buy a car, rent an apartment or even apply for a job, a credit score is going to determine whether you are approved or rejected. To help you improve your credit score, here are five proven tips that you can use today.
1). Pay Bills on Time
The first thing you need to do is pay your bills on time. According to the three major credit reporting agencies – Experian, Trans Union, and Equifax – you should aim to have a 98% or above on-time bill payment record to maintain an excellent credit score.
A great way to ensure that you pay your bills on time is to set up automatic bill payments at least five days before your accounts are due. This will ensure that you don’t accidentally forget to pay any bills.
2). Get Credit Card Balances Below 30%
You will want to ensure that you don’t use too much of your credit card balance. The three credit reporting agencies will see a credit utilization of less than 30% as a positive. Therefore, if you have a $2,000 credit card limit, you will want to maintain an average balance of $600 or less.
You can maintain a low credit card balance by following these steps when it comes to credit card spending:
- Only use your credit card for emergencies
- Avoid impulse purchases with your credit card
- Remove your credit card information from online stores
3). Monitor Credit Scores
It’s a good idea to monitor your credit scores to see how you are doing. Each one of the credit reporting agencies allows you to get one free credit report a year. However, it’s a good idea to sign up for a free service like Credit Karma that regularly monitors your credit reports.
When monitoring your credit report, be sure to look at the six categories that determine your credit score:
- Number of open accounts
- Age of accounts
- Payment history
- Credit utilization
- Delinquent notices
- Hard inquires
4). Limit hard Inquires
Be sure to limit the number of hard inquiries on your credit report to no more than two per year. A hard inquiry is performed when you apply for a loan or a credit card. Too many hard inquires are an indication that you are trying to take on lots of credit.
While you ultimately want to have about ten open accounts, you should spread them out to one every six months. This looks like you have a more controlled strategy for handling debt.
5). Keep Old Accounts Open
Be sure to keep your old credit card accounts open. The age of your accounts is one of the six factors that determine your credit score. Even if you don’t use a credit card often, having aged credit is a positive for your credit score.
Ultimately, the credit reporting agencies are looking for an average credit score of seven years. This is why you want to make sure that you don’t close any accounts.
Getting the Credit Score that You Deserve
An excellent credit score of over 740 on a range of 300 to 850 is a gateway to many excellent financial opportunities. Be sure to follow the above steps to help make your credit scores hit new heights.