Here at CreditSoup, we talk a lot about credit scores. You may be wondering, does my credit score really matter that much? Should I be making proactive steps to improve my score or just assume it will get better with time? We’re here to tell you that your credit score is important, and we are going to break down what you can do to improve that critical number.
First off, you need to not only know your Credit Score but actively monitor it as well to see the changes, whether it be positive or negative. If you are unsure what your credit score is, you can check here for free. Also, do not believe the myth that checking your credit score hurts your score in the long run. These soft checks have absolutely no impact on your score and are highly recommended, so you have an overall idea of your credit health.
Here are 5 easy steps you can start right away to improve your score.
1. Pay your bills on time
It sounds simple but payment history has the single biggest effect on your overall score. Set alerts on your phone or get set up for automatic payments to make sure ALL payments from credit cards to utility bills are paid on time.
2. Increase your credit limits
Try calling your card issuer to ask for an increased credit limit and if they can do it without a “hard” credit check. The higher your credit limit, the lower your credit utilization will be. Having low credit utilization is a key factor in your score. Aim for 30% credit utilization or less.
3. Pay off debt twice a month
While paying as much as you can monthly is great, it may pay off to make smaller payments more frequently. This will keep your running balance lower for whenever your creditor reports balances to the major credit bureaus.
4. Keep old credit accounts open
If you have credit accounts you are not using much, it may seem to make sense to close them down, however there are advantages to keeping these accounts open. Credit age is a portion of your score so the longer you have had a credit account, the more favorable it is to your score. Having additional credit lines open will also help with your overall credit utilization that you want to keep low. Low credit utilization shows that you are only using small portion of the overall credit amount that is available to you.
5. Review your credit score and dispute any errors
If anything looks off to you, you can dispute with one of the 3 major credit bureaus. You can see your credit score here along with recommendations on areas of improvement. You are able to review your credit score for free every 30 days on CreditSoup.
Now why is your credit score so important? It can play a big role in your everyday life such as the interest rate you pay for credit cards, mortgages and auto loans. It can even prevent you from getting a loan at all! The higher your interest rate, the more money you will be losing long term. Don’t forget to check your score frequently to keep that score going up!
Editorial Disclaimer: Information in these articles is brought to you by CreditSoup. Banks, issuers, and credit card companies mentioned in the articles do not endorse or guarantee, and are not responsible for, the contents of the articles. The information is accurate to the best of our knowledge when posted; however, all credit card information is presented without warranty. Please check the issuer’s website for the most current information.