Building a strong credit score can make life much easier, allowing you a greater chance of qualifying for credit cards and various loans at more affordable rates. A poor credit score can potentially cost you thousands of dollars in your lifetime from higher interest rates and lower approval ratings.
Many Americans struggle to improve their credit score and there are many ways to build good credit! Although there are many things that can affect credit scores, here are 3 tips on how you can improve your credit score today!
Check Your Credit Reports and Score for Accuracy
The first step to improving your credit is to regularly check your score and credit reports. Everybody has 3 credit reports, with one from each of the 3 largest credit bureaus: Experian, Equifax, and TransUnion. Many credit reports, however, contain errors. A study from the Federal Trade Commission found that roughly 20% of Americans have an error in one of their credit reports.
Every person is entitled to a free copy, once a year, of their credit score from the Fair Credit Reporting Act. You can easily access these reports on the government mandated website AnnualCreditReport.com. It is important to remember that one report from a bureau may have an error, the others may not. Websites such as CreditKarma.com also show you your credit score for free.
Stay Under Your Credit Limit
Credit Utilization– or how much of your credit you use, has a great impact on your score. The overall consensus is that you should keep your balances to 30% of your total credit limit, or even less if possible.
Another tactic to stay under your credit limit is to make multiple yet small “Micropayments” on your credit cards during the month to keep your overall balances down. Doing this at the end of each day will also help you keep track of where and when you are spending your credit.
Get On Top of Payments
Nothing will work to increase your credit unless you are also paying off your balances on time. Payment history is the single biggest influencer on credit scores. If you are significantly behind on your payments, call the creditor.
Arrange a way to pay your balance and ask if it will help remove the reported delinquencies so they do not appear on any of your credit reports.
Even if you are unable to remove the previous late payments, you should get current on your account as quickly as you can. Each month you are late or behind on payments hurts your credit score and report. Missed payments alone stay on your credit score for 7 years! Focus on paying your bills on time!
If you are trying to fix your credit score to get an auto loan, look no further! CrediReady has a nationwide database of trusted lenders and dealers that work with buyers in any and all credit situations. Take a few moments to fill out our free no-obligation form to find the best auto loan for you!