Credit Score Booster Shot
Last week, we talked about what goes into your credit score. Now let’s cover some tips on making sure it’s as high as it can be. That will give you the most financial options and peace of mind.
Check Your Credit Report Regularly
Knowledge is power. You can start by knowing what your score is. You are entitled to free copies of your major credit bureaus (Equifax, Experian, and TransUnion) and review them for errors or fraudulent activity. Dispute any inaccuracies promptly to ensure your credit score is based on correct information.
Go to Annual Credit Report.com for to order.
It’s a Balancing Act
Keep your credit utilization low by maintaining a balance between the amount you owe and your available credit. Aim to pay off credit card balances in full each month to avoid accumulating high-interest debt. If that’s not possible right now, aim to get your credit card utilization below 30% to demonstrate responsible credit management
Keep Old Accounts Open
Closing old credit accounts can shorten your credit history and potentially harm your score. Even if you don't use them frequently, keeping these accounts open can benefit your credit score.
Limit New Credit Applications
Be selective when applying for new credit and only do so when necessary. Multiple inquiries within a short period can signal financial distress to lenders.
Regularly Use Your Credit
This might be counter-intuitive. Inactive accounts may be closed by lenders, leading to a reduction in your available credit and potentially impacting your credit score. To prevent this, use each of your credit accounts periodically, even if it's just for small purchases that you can pay off in full. This activity demonstrates ongoing credit management and can help maintain or improve your score.
If you have bad credit or are rebuilding it, here are two other tips.
Become an Authorized User
If you have a trusted family member or friend with a strong credit history and low credit utilization, consider becoming an authorized user on one of their credit accounts. As an authorized user, you can benefit from their positive credit history, potentially boosting your own score. This is great for parents to help their kids build scores.
Consider a Secured Credit Card
With a secured card, you'll need to provide a security deposit, which typically becomes your credit limit. By using the card responsibly and making timely payments, you can establish a positive payment history and gradually improve your credit score. Just ensure that the issuer reports your activity to the major credit bureaus.