Needless to say that a credit score is an important financial tool. Most of us use different credit and financial products and to have access to the best ones it’s necessary to be an owner of high credit score. It doesn’t matter whether you consider buying a home or get a personal loan for your needs, a high credit score of 751 and up will let you get the most competitive and lowest interest rates on the market. All the lenders are happy to deal with consumers having high credit scores because for them it’s a guarantee of responsible financial behavior.
Review Your Credit Report
The average credit score in the US is 711. If your credit score is low, you can use payday loans online for people with bad credit or you can start raising your credit score. The first step is to get your credit reports from each of the three major credit agencies. Then you have to check errors, for example, incorrect credit limits, late payments and clear them up immediately. Checking credit reports is free, so do it once a year to avoid penalizing for checking your own credit report or credit score.
Pay Bills on Time
One of the habits helping to maintain perfect credit is paying all the bills on time. Late payments have the biggest negative impact on your credit score. Do your best to avoid it! If your problem is that you forget to pay bills on time then you can solve it easily by automating your payments. If you have overdue bills then it’s necessary to consider how to get them caught up. Having an account in a collection agency is a blemish on your credit report and it will stay there up to 7 years.
Pay Down Credit Card Balances
One of the best ways to boost your credit score is to reduce your overall debt which is on your credit report. In this case, borrowing money from friends or family members can be a good idea, you can use the loan you get from them against your overall debt and it will quickly increase your credit score! However, this option doesn’t help to eliminate your debt because you get one loan to repay another one, but it gives a big and quick boost to your credit.
Don’t Cancel Your Credit Cards
Canceling credit cards can have a negative effect on your credit score and lower it. However, it doesn’t mean that you have to put all of your expenses on your credit cards. Choose such a smart strategy like occasional use of your credit cards. In this case, the issuer will not stop reporting the information to the credit bureaus and they will keep track of your payments. Keep in mind that having a long credit history helps to improve a credit score, so use your old credit cards from time to time.
Don’t Max Out Your Credit Cards
There’s the golden rule – try to keep your balances below 30% of your credit limit. Do that even if you pay your balances in full each month. If you have one credit card and you regularly exceed 30% of your credit limit, then it would be good to consider getting a second credit card. It’s better to have two cards and keep the balances below 30% than to have the one card that you systematically max out.
Get a Secured Credit Card
It’s a good idea for consumers with no credit history or low credit score. If you need money now and for any reason, you can’t get an unsecured credit card, then get a secured one. To get the desired effect, choose a secured card that reports the information to the credit bureaus. You should make a security deposit (usually it’s at least a couple hundred dollars) which the card issuer holds as collateral. If you show responsible use for the next six months then on most of the occasions your credit will be extended.