Your credit score is one of the most important numbers in your life. It dictates how much money you can borrow, what interest rates you’ll pay, and even whether you can get a job. So it’s no surprise that many people are looking for ways to upgrade it. But how can you do that? Here are four simple steps to improve your credit score.
What exactly is a credit score?
A credit score is a number that lenders use to assess an individual’s creditworthiness. The higher the score, the more likely the individual is to be approved for a loan. Credit scores range from 300 to 850, with scores of 700 or above considered “good” and scores of 850 considered “excellent”.
Credit scores are determined by taking into account a variety of factors, including payment history, credit utilization, and length of credit history. Individuals with good credit scores tend to have strong payment histories and low credit utilization rates.
Those with excellent credit scores tend to have long credit histories and high credit limits. Credit scores are important because they provide lenders with a quick way to assess an individual’s risk level. By understanding an individual’s credit score, lenders can make informed decisions about whether or not to approve a loan.
If your credit score isn’t where you want it to be, don’t worry. There are plenty of things you can do to improve it.
Make your payments on time
One of the most important things you can do to improve your credit score is to make your payments on time. Payment history is one of the biggest factors that determine your credit score, so it’s important to keep up with your payments.
If you’re having trouble making your payments on time, consider setting up automatic payments. This way, you can ensure that your payments are always made on time.
If you are not a fan of automatic payments, you can also set up reminders for yourself so that you don’t forget to make your payments. Whatever method you choose, just be sure to make your payments on time.
Keep your credit utilization low
Credit utilization is another important factor that determines your credit score. Credit utilization is the amount of debt you have relative to your credit limit.
Ideally, you want to keep your credit utilization below 30%. This means that you’re using less than 30% of your available credit.
If your credit utilization is high, you can lower it by paying down your debt or by increasing your credit limit. Both of these options will reduce your credit utilization and help improve your credit score.
Build your credit history
Another way to improve your credit score is to build your credit history. The length of your credit history is one of the factors that determine your credit score.
If you don’t have much credit history, you can build it by opening a new credit card (take a look at best credit cards for bad credit with no deposit) and using it responsibly. Just be sure to keep your credit utilization low so that you don’t hurt your credit score.
Avoid moving your home
Lastly, you should avoid moving your home too often. The length of time you’ve lived in your current home is another factor that determines your credit score. Lenders like stability, so if you move too often, it could hurt your score.