How to Raise Your Credit Score with a Credit Card
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If you’re looking to raise your credit score, using a credit card can be a great way to do it. But it’s important to use the right card and to know how to use it properly. In this blog post, we’ll give you some tips on how to raise your credit score with a credit card.
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Check your credit report for errors
One of the quickest ways to improve your credit score is to fix any errors on your credit report. You can get a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once per year at AnnualCreditReport.com.
Check your report carefully for any mistakes, such as incorrect balances or accounts that don’t belong to you. If you spot any errors, dispute them with the credit bureau right away.
According to a 2012 study by the Federal Trade Commission, one in four people who disputed an error on their credit report had the mistake corrected by a creditor or the credit bureau. So it’s definitely worth taking the time to check your report for errors and dispute any that you find.
Get a credit card and use it responsibly
If you don’t have a credit card, get one. If you have a credit card, use it responsibly.
That’s really all there is to it. By using a credit card and showing that you can handle your debt responsibly, you’ll be well on your way to boosting your credit score.
Of course, there are other things you can do to improve your credit score, like paying down debt, maintaining a good credit history, and keeping your debt-to-income ratio low. But if you don’t have a credit card, or if you have bad credit, getting a credit card and using it responsibly is the best place to start.
Use a credit monitoring service
If you’re looking to raise your credit score, one of the best things you can do is to sign up for a credit monitoring service. Credit monitoring services will help you keep track of your credit report and score, and they will also provide you with alerts if anything changes on your report. This can be a valuable tool in helping you raise your credit score, as it can help you catch any potential problems early on.
Dispute any errors you find on your credit report
If you find any errors on your credit report, make sure to dispute them right away. Errors can have a negative impact on your credit score, so it’s important to get them removed as soon as possible. You can do this by contacting the credit bureau directly and providing them with documentation that proves the error is inaccurate.
Pay your bills on time
One of the easiest things you can do to improve your credit score is to pay your bills on time. Payment history accounts for up to 35% of your credit score, so missing even one payment can have a significant impact. If you have trouble remembering to make your payments, you can set up automatic payments through your bank or credit card issuer. This way, you’ll never have to worry about missing a payment – and you’ll never be late.
Your payment history isn’t the only factor that impacts your credit score. Credit utilization (the amount of debt you have relative to your credit limit) is also important. A good rule of thumb is to keep your credit utilization below 30%. This means you should be using no more than 30% of your available credit at any given time.
If you need help getting your debt under control, consider talking to a nonprofit credit counseling agency. These organizations can help you develop a debt management plan that will allow you to pay off your debt over time while also improving your credit score.
Keep your credit card balances low
It’s important to keep your credit card balances low if you want to improve your credit score. High balances can hurt your score even if you make your payments on time. So aim to keep your balance below 30% of your credit limit — and lower is even better.
Here’s what that looks like: If you have a credit card with a $1,000 limit, try to keep your balance below $300. If you have a card with a $5,000 limit, aim for a balance of $1,500 or lower.
Paying off your balance each month is ideal, but if you can’t do that yet, work on reducing it little by little. You can also ask for a higher credit limit from your card issuer — that will lower the percentage of your balance and could help boost your score.
Use a mix of credit products
Credit mix is the types of credit products you have on your credit report. A variety of different types of credit products indicates to lenders that you can handle multiple types of debt responsibly.
Having just a credit card or just a car loan, for example, may not be enough to demonstrate responsible borrowing habits. An ideal credit mix would include both installment loans (loans with fixed payments, such as a car loan) and revolving debt (debt with variable payments, such as a credit card).
