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Apply These Three Methods to Improve Your Credit

 

Attempting to remember an extensive list of steps to improve your credit score is an exhaustive exercise. We’ve decided to simplify it for you. While pursuing for credit card consolidation and avoiding ew hard credit inquiries can help improve your credit as well, we’re asking you to look at the amounts you owe, your credit utilization, and your credit reports.

1. Pay Your Credit Cards Strategically

Amounts owed, which represents 30% of your credit score, are reported to the credit bureaus monthly. Your objective should be to make sure your balances are as low as possible when those reports go out. The best ways to do that are to pay your credit card bills before the end of the billing cycle or make payments multiple times during the month.

Another variable at play in this strategy is your payment history. On-time payments account for 35% of your credit score, so making monthly payments on your credit cards on time (or early) will improve your payment history. Be religious about this and you’ll start to see your credit score come up. You may see a small score increase in as little as one month.

2. Bring Credit Utilization Down Below 30

Credit card balances are revolving balances. When you make a payment, they go down. After making a purchase, they go up. The amount of credit that you use is known as your credit utilization. It is typically expressed as a percentage of the credit limit on your card. For instance, if your limit is $1,000 and you’ve spent $500, your credit utilization is 50%.

This is important because credit utilization is part of the credit score equation. Lenders look at it when they review new credit applications. For best results, you’ll want a utilization rate that is under 30%. Bringing it down to that level will increase your credit score and improve your chances of getting new credit cards, personal loans, and mortgages.

3. Review Your Credit Reports Regularly

To be clear, we’re not talking about reviewing your credit scores. Those are important, but credit reports give you the how and why behind your credit score. You can get your first copies of all three reports for free at  AnnualCreditReport.com. You’re legally entitled to them once a year. To monitor them more frequently, you may need to sign up for a paid credit monitoring service.

This can be a helpful step because constant vigilance may lead to changes in the way that you spend money and manage credit.

Keep Your Credit Score Up

Anyone can follow a few tips to improve their credit score. The important question is: How do you prevent it from going down again? Pay your bills on time and try to pay cash whenever possible. Monitor the results of those actions by regularly reviewing the monthly reports published by Experian, Equifax, and TransUnion. Continue to follow these three simple suggestions, and you won’t need to worry about it.