Having a good credit rating can help you buy a car, get a mortgage, obtain another loan, and get a higher credit limit. But many people live with bad credit because they don’t maintain or track their credit properly. Building credit is easy; you just have to be disciplined with your payments and avoid doing anything that your bank and the credit bureau sees as a risk. If you’re looking for ways to improve your credit rating, check out this list of best approaches to a high credit score.
Pay On Time
To get a high credit score, you need to make all your bill payments on time. This includes your credit accounts, mortgage payment, your phone bill, and also your utility bills. Not all bills are regularly reported on your credit report, but if you don’t pay them, then it can become a problem. Any unpaid bills will be addressed through a collection agency, and this will damage your credit rating. Paying all your bills on time will avoid any problems and build your credit score.
Carry A Low Balance
Keeping your balance low when compared to your limit will improve your credit score. If you can’t pay in full each month, try to pay some down and avoid reaching or going over your credit limit. As a rule of thumb, keeping your balance under 30% of the maximum allowable will maximize your credit score.
Avoid Opening Too Many Accounts
Opening a number of new credit and loan accounts at once can impact your credit score. If you’re searching for a car loan, student loan, or mortgage financing, you will not be penalized. But if you have several credit card companies applying for your credit report, it can.
Keep Accounts for As Long As Possible
The longer your accounts have been active, the more secure you appear to the banks. Banks like security and credit bureaus primarily measure your capacity based on the age of your oldest account. So the best practice is to establish an account that will stick around on your credit report forever and ensure this credit instrument is kept in tip-top shape.
Make Small Purchases
Keeping your account active is also important. By making a small purchase once a month and paying it off immediately, you can keep your credit functional and also build your credit score.
Check For Errors
You should also review your credit history and check for any errors or discrepancies. If you find something concerning or off, make sure to call your bank and sort it out as soon as possible.
It’s important to keep your credit score high, and if you’re struggling to manage your debt, talk to us at The Financial Forum. We can help you get back on track and build your credit to qualify for the best rates and terms on any loan you need.