1. Make Your Payments on Time
Experts recommend making at least the minimum payment on or before the due date, and preferably to pay the statement balance in full if possible. On time payment demonstrates to the lender you can handle the line of credit you’ve been given and goes a long way in building trust. Consistently paying accounts on time should help to improve your credit score as your financial security grows.
2. Keep the Balance Low
Any outstanding debt that accrues on your credit card could impact your credit score. Experts generally recommend keeping credit card debts below 30% of the established credit limit. One easy way to do this is by limiting credit card purchases. Need a new phone? Consider a cheaper deal on a used one to help preserve your credit cushion.
It’s understandable that making timely credit card payments can easily slip your mind as you navigate the demands of daily life. To prevent credit balance accumulation and the negative effect it can have on your credit score, there are a few best practices you can implement.
- First, try setting reminders on your cell phone.
- Next, look to sign up for automated payments.
- Finally, if you carry a balance on your card and find yourself with some extra funds, consider a spontaneous lump-sum payment to bring the overall debt down.
3. Correct Credit Report Errors
All three of the major credit reporting agencies (TransUnion, Equifax, and Experian) will provide you with a free copy of your credit report if you ask for it. Scrutinize the findings, highlight any inaccuracies, and dispute any items that should be removed. Prior unpaid bills or debt collections that have been satisfied are good places to start. Be ready to supply proof that the items in question are verifiably incorrect and should be removed.
4. Request a Higher Credit Limit
It’s important to remember that maxing out your credit cards could work against you in the lending world. In fact, lenders prefer borrowers to utilize no more than 30% of their available credit. If you find yourself frequently maxing out your limit, consider asking your lender for a higher limit.
Obtaining a higher credit limit while your outstanding balance remains constant will immediately improve your credit-to-debt ratio and could yield a positive impact on your credit score. A bump in your income could improve your chance of getting a higher credit limit. If you have recently received a raise, consider giving your issuing bank a visit to request a credit-line increase in light of your higher income.
Building Your Credit Score as Fast as Possible for the Future
A good credit card score is increasingly becoming the litmus test for overall financial reliability. Landlords, employers, and insurers might even use your credit score reports to gauge how responsible a renter, employee, or driver you will be.
A good credit score could influence the kind of apartment you live in, the type of job offer you get, and the insurance rates you’re subjected to. You might also enjoy lower interest rates on different of loans with a good credit score.