Credit scores can be tricky not because it involves complicated formulas but because the concept has been shrouded with misconceptions. One of which is the belief that fixing a bad credit score is extremely difficult. While boosting your credit score is certainly not a walk in the park, it’s important to note that it’s not rocket science either. If you follow the following tips and tricks below, you are likely to see significant improvements on your credit score over the course of 12 months or so.
Check your credit report annually
Your credit report includes a significant amount of financial data used to formulate your credit score. Errors can happen which is why you can’t take chances. To get it right from the start, make sure you take your time to check your credit report regularly. Once a year should be enough but you are also recommended to do it before making any major applications.
Report and dispute errors
When you do spot mistakes or errors on your credit files, the next obvious step is to report or dispute any errors if necessary. You can do so online through websites such as Experian or Equifax. If the errors were minor, it shouldn’t take much time until they are fixed.
Get a credit card to build history
If you’re trying to rebuild your credit score, credit cards come as handy tools you can use. Remember that your score is all about your performance or behavior as a borrower. That means you need to build a history first if you have little to no history yet. Getting a credit card or two can help you do just that. Just make sure you use it responsibly.
Register to vote
You’d also want to make sure that you are registered to vote. Unless you are on the electoral roll, you are less likely to get approved for an credit application. Registering to vote is super easy so there’s no excuse for you not do it. You can either register online or by post.
Request for a credit limit increase
If you’ve been using your credit cards responsibly, you may be eligible for a credit card limit increase. You can call your card provider and request for one because that will look good on your credit history. Just remember that the 30% rule thumb still applies. That means you still need to keep you charges below 30% of your credit limit as much as possible.
Limit your credit applications
Applying for credit products too often is not going to help you improve your credit score. Every application leaves a footprint to your credit files. The more you apply, the higher the chances of rejection which will also look like you’re desperate for credit. Make sure you limit your applications for products such as credit cards, car insurance and mobile phone contracts at the moment.
Don’t close old credit cards
If you have credit cards you rarely use, don’t close them just yet. Cancelling will only make your credit to drop which will eventually affect your score’s formulation. Rather than close any accounts, use them regularly for recurring bills such as groceries or utility bills then pay the balance off in full each month.
Pay all credit repayments on time
Finally, you need to make sure you pay all credit cards and bills on time. Considering that payment history constitutes 35% of your credit score, one of the best ways to boost your score is if you commit to pay your bills on time. After a few months of consistent on time payments, you should see your score going up.