Keeping your head above water financially is tough enough these days. But keeping your credit score high enough to be approved by traditional lenders? Ask just about anyone, and you’ll probably run into a lot of people whose scores are far from perfect.
It’s understandable. In the wake of the Great Recession, you’ll be hard-pressed to find an average Joe or Jane whose credit didn’t take a hit in one way or another. Thankfully, for as many ways as your credit score can take a hit, there are is equal number of ways you can improve your credit score. Some take longer than others, but all are effective in boosting your points and making your life a whole lot easier.
4 Ways to Boost Your Credit Score
It’s important to take the time to consider how and why your credit score has fallen. Living within (or below) your means is perhaps the most important part of not just improving your credit score, but your financial life as a whole. Credit can be a harsh mistress, and if you spend more than you make, that’s the fastest way to tank your score.
There are several ways to go about boosting your credit score. Some may take longer than others, but most if not all of them are equally effective.
Check Your Credit Report
First things first. Make sure to grab a free copy of your credit report from each of the three major bureaus: TransUnion, Equifax, and Experian. You’re entitled to one free copy every year without your credit taking a hit. Once you get your reports, make sure all the information checks out and that there aren’t any glaring errors. Even credit bureaus have been known to make mistakes!
Pay Attention to Your Credit Limit
Credit utilization ratio is what often gets borrowers into trouble. Even if you don’t overspend or max out your credit cards, if you use more than a certain percentage of your credit limit (oftentimes as low as 20% – 30%) it’ll actually hurt your credit score, even though you didn’t do anything wrong or miss any payments.
You can get new cards and not use them frequently. The point is to show new lenders that other lenders trust you enough to approve you for several cards.
Focus On Paying Off Your Balance
Paying your bills on time is critical in both raising and maintaining your credit score. This is also one of the quickest ways to improve your score.
However, if you’re struggling to catch up with an overdue balance (or two, or three), there are ways you can make this a little easier on your finances. For instance, you can transfer your balance onto a new transfer card with a 0% APR special going on. This gives you time to play catch-up without having to worry about astronomical interest rates. However, make sure you’re actually paying your debt and not just moving it around – that won’t help you in the long run.
Don’t be too quick to close old cards
One factor that people often forget affects their scores is the length of their credit history. If you have a ten-year-old credit card you never, ever use that is simply sitting in your wallet collecting dust, think twice before closing it for good. Closing an old card can hurt your score in making it look like your history doesn’t have as much, well, history as it actually does.
Rebuild Your History One Step at a Time
Cleaning up your credit score is not as daunting a task as it seems. Even if you’ve filed for bankruptcy, you can still recover in due time.
However, it also goes without saying that life rarely waits for you to get your credit straightened out before throwing an unexpected expense your way. You might need to borrow money when you have bad credit but can’t. In cases like this, a bad credit loan might be a solution to consider.
The most important thing when it comes to raising your credit score is to take a deep breath, and make sure you make it a priority to pay your balances on time, every time.
And, of course, to live within your means!
In the end it is better to borrow money with a solid credit history behind you, but if you find yourself in a financial bind and truly need to borrow money for an emergency, you can rely on a car title loan to get the cash you need.