How can you improve your credit score in 6 steps?

A credit score is your key to earn a reputation in the eyes of the financial institutions. Often we tend to take it very lightly and do not understand the importance of maintaining a good credit score. Here are 6 simple steps to improve your credit score:

  • Credit Card Balances: You need to check your credit limit and usage. Make sure that you use a maximum of 30% of the credit limit and pay your balance on time. Even if you have more than one credit card, you need to ensure that you keep the balances on both the cards low and then pay that balance off in full on or before the due date.
  • Use one or two credit cards: You need to avoid useless balances. Instead of using $100 from one card and $500 from another is just going to deteriorate your credit score. Pay all the balances from different cards and use one or two cards for your regular use.
  • Old debts: It is a misconception that your credit score will improve by removing the old credit history from your credit reports. The credit which was repaid on time, for instance for your home, car, etc., should not be removed from your credit report as they improve the credit score. As far as negative credit history is concerned, that is erased from your credit report after seven years. So, you need to develop a good credit history to increase your credit score.
  • Timely payment: You must pay off your credit bills on time! For a good credit history, it does not matter whether and what amount of money do you have in your account. What matter is timely payments of your credit balance? There is no other solution! Just pay them on time and earn a good credit score.
  • Don’t reflect your risks on your credit history: This is the last thing you would want to do! Never use credit in places which portrays instability of your personal or professional life, for instance, pawnshop, divorce lawyer, business loan, etc. This will have a negative impact on your credit score, so simply avoid doing it.
  • Check your credit score: You need to check your credit score regularly. Using Equifax, TransUnion and Experian are advisable. This will help you to track and understand where are you going right or wrong and help you use your credit card more wisely and smartly.

Building a good credit score needs some education and the ability to think about long-term requirements. Never take it lightly as it would delay your dreams of purchasing your own house and car. We know you’ll be able to make a good credit history and score, just stay updated!