Do you know the 5 steps to increase your credit score? If not, you’ve come to the right place. At Voila Moola, we love helping our readers save money. And a big way to save yourself some serious cash is to make sure your credit score is as high as it can be. Let’s talk about why your credit score is so important.
What Is A Credit Score And Why Does It Matter?
Your credit score is a 3-digit number that acts as a snapshot of your credit worthiness. In other words, it tells banks and other lenders in one glance if you’re a good credit risk {or not!}. The score is assigned by each of the three major credit bureaus, including Experian, and is taken from your overall credit history. The higher your score, the better, because lenders will offer you lower interest rates on major purchases like mortgages and car loans. But if it’s not where it should be, there are steps to increase your credit score.
5 Steps To Increase Your Credit Score
It takes a little time to increase your credit score significantly, but as you build these steps into your financial life you should see steady improvement that adds up over time.
- Pay ALL your bills on time! This one is pretty basic, but it should be a priority for everyone. Lenders are always very interested in how reliable you are on your bill payments. And not just loan and credit card payments, but utilities, rent, and medical bills too.
- Keep credit card balances low. Part of your credit score is the ratio between your credit limits and statement balances. They love to see that you utilize 30% or less of your credit limit at any given time.
- Don’t open new credit card accounts unless you have to. Some people mistakenly believe that having an array of credit options looks good on a credit report, but that’s not true. It just tempts you to overspend, and puts too many hard inquires on your score–which lowers it!
- Keep unused credit accounts open! If you’ve already got open accounts that are unused, it’s smart to keep them open. You should only close one if it costs you extra money in annual fees. Otherwise, leave them open and unused to lower your credit utilization ratio. {See step #2}.
- Check your credit scores and reports regularly. Keep an eye on things, and if any mistakes show up, dispute them asap. Incorrect information on any of your credit reports doesn’t do your score any favors! You can get a free credit report every year.
Follow these easy 5 steps to increase your credit score, and you will see steady improvement over time. And that saves you money on future home and automobile loans! Along with these steps, it’s always a great time to implement money goals to improve your financial future.
