- Check your credit report for errors
- Pay your bills on time
- Pay down your debts
- Keep balances low on credit cards and other ‘revolving credit’
- Apply for and open new credit accounts only as needed
- Don’t close unused credit cards
- Space out applications for new credit
- Have a mix of different types of credit
You can raise your credit score by following a few simple steps. This blog will show you how to raise your credit score by 50 points in no time!
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Check your credit report for errors
The first step is to check your credit report for any errors that may be dragging down your score. You are entitled to one free credit report from each of the three major credit bureaus (Experian, TransUnion and Equifax) every 12 months, so take advantage of that. You can get your reports for free at AnnualCreditReport.com.
If you find any errors, dispute them with the credit bureau right away. This is something you can do yourself; you don’t need to hire a lawyer or a credit repair agency. Simply writing a letter to the bureau explaining the error and asking that it be removed should do the trick.
If you have negative items on your report that are accurate but outdated (for example, late payments from several years ago), you can try asking the credit bureau to remove them. The thinking here is that if it’s been several years since you missed a payment, it’s not very relevant to your current creditworthiness. Often, these items will be removed automatically after seven years anyway, but it doesn’t hurt to ask.
Pay your bills on time
One of the biggest factors in your credit score is your payment history—or whether you pay your bills on time. So, if you have any late or missed payments, now’s the time to start paying on time. Set up autopay or reminders so you never miss a payment again.
In addition, try to keep balances low on credit cards and other “revolving credit.” If possible, pay in full each month; if not, do your best to keep balances well below 30% of your available credit (10% is even better). This will help improve your credit utilization rate—the portion of your credit limits that you actually use.
Another factor that weighs into your score is the average age of all your accounts. So, if you have some older accounts, don’t close them—keep them active by using them from time to time.
Pay down your debts
One of the biggest factors in your credit score is your credit utilization ratio, which is the amount of debt you have compared to your credit limit. If you have a lot of debt and a low credit limit, your credit utilization ratio will be high, which will hurt your score.
So, if you’re looking to raise your score by 50 points, one of the best things you can do is pay down your debts. Try to focus on paying down yourRevolving debt, such as credit cards and lines of credit. installment debt, such as car loans and personal loans, can also help raise your score, but revolving debt has a bigger impact.
In addition to paying down your debts, you should also try to keep balances low on any accounts that report to your credit report. This includes both Revolving and installment debts. If you have a balance of $0 on an account, it will help boost your score even more.
Keep balances low on credit cards and other ‘revolving credit’
One factor that affects your credit score is how much of your available credit you are using. This is called your credit utilization ratio. It compares the amount of debt you have to the amount of credit you have available. For example, if you have a $1,000 credit limit and owe $500, then your credit utilization ratio is 50%.
The lower your credit utilization ratio, the better for your score. So, if you can, keep balances low on credit cards and other ‘revolving credit.’
Pay down debt rather than moving it around
Another factor that affects your score is the types of accounts you have and how long they have been open. So, it’s not just about how much debt you have but also about the mix of different types of debt. For example, mortgages tend to be good for your score because they’re secured by your house so they show that you’re unlikely to default on them. Student loans are also considered good debt because they usually come with low interest rates and deferred payment plans.
Credit cards can be both good and bad for your score depending on how you use them. If you pay off your balances in full and on time every month, then they can help improve your score by showing that you’re a responsible borrower. But if you carry a balance from month to month or only make minimum payments, then they can hurt your score because it shows that you’re struggling to repay what you owe.
If you’re trying to improve your credit score, one of the worst things you can do is move debt around by opening new accounts or closing old ones. That’s because this will change the mix of debts in your report and could potentially lower your score if it causes yourcredit utilization ratio to go up.
Apply for and open new credit accounts only as needed
Opening new accounts unnecessarily can result in hard inquiries on your credit report, which can ding your score in the short term. If you don’t need a new credit card, don’t apply for one. When you do open a new account, try to keep your credit utilization—your balance divided by your credit limit—under 30% so it won’t hurt your score.
Don’t close unused credit cards
One common mistake people make when they’re trying to improve their credit score is closing unused credit cards. While it may seem logical — you don’t want the temptation of available credit, so why keep the card open? — closing an unused credit card can actually do more harm than good.
When you close a credit card, you lose the history associated with that account. And part of your credit score is based on the length of your credit history. So, by closing an old account, you could be negatively impacting your score.
In addition, closing a credit card can increase your credit utilization ratio — the amount of debt you have compared to your available credit. This is another factor that is used to calculate your credit score. So, even if you pay off your balance in full every month, closing an unused credit card could still hurt your score.
If you’re trying to improve your credit score, it’s best to keep unused cards open and active by using them for small purchases and paying off the balance in full each month. Not only will this help improve your credit score, but it will also keep you from falling into debt if temptation strikes and you charge more than you can afford to pay back.
Space out applications for new credit
One important factor that determines your credit score is how often you apply for new credit. If you’re constantly applying for credit, it’s a sign that you’re struggling to manage your finances, and it will have a negative impact on your credit score. So, if you’re looking to raise your credit score by 50 points, one of the best things you can do is space out your applications for new credit.
Applying for new credit too often can also give creditors the impression that you’re desperate for cash, which can lead them to be less likely to extend credit to you. So, when you are applying for new credit, make sure that you do so in a thoughtful and strategic way.
And finally, remember that it takes time to rebuild your credit score. If you space out your applications for new credit and focus on using the credit you already have responsibly, your credit score will gradually start to improve.
Have a mix of different types of credit
Your credit score is a number that lenders use to assess how likely it is that you will repay a loan. In general, the higher your credit score, the lower your interest rate will be. So, if you’re looking to take out a loan or get a credit card with a low interest rate, you’ll want to do everything you can to raise your credit score.
One of the best ways to raise your credit score is to have a mix of different types of credit. This could include a mortgage, a car loan, a student loan, and a credit card. Having different types of credit shows lenders that you can handle different types of debt responsibly.
Another way to raise your credit score is to make sure you always make your payments on time. Lenders will report late payments to the credit bureaus, which will lower your credit score. So, it’s important to set up automatic payments for all of your bills so that you don’t have to worry about forgetting to make a payment.
If you have any questions about how to raise your credit score, we suggest talking to a financial advisor. They can help you understand what factors are impacting your credit score and come up with a plan to improve it.