6 Expert Tips for Building and Improving Your Credit

by Marcy on June 27, 2019 · 0 comments

how to raise your credit scoreDisclosure: This is a sponsored post. View my disclosure policy here.

Building and maintaining favorable credit isn’t just a good idea. These days, it’s an absolute necessity. Your credit rating can affect your ability to secure housing, buy a vehicle, or even land your dream job. Bad or nonexistent credit can make it difficult to impossible to get approved for bank loans, including mortgages and business loans, as well. However, it’s important to understand that bad credit isn’t the end of the world. All you need is a little dedication and know-how when it comes to how to raise your credit score. Start with the following tips.

1. Check Your Report for Accuracy

It’s estimated that one out of every five people has at least one error somewhere on one of their three major credit reports, so the sooner you get into the habit of regularly inspecting yours, the better. Each person is entitled to one free report per year, so make it a point to request yours annually and look it over thoroughly. Is all of your personal information recorded correctly? Do you see any accounts, applications, or other entries that you don’t recognize? Make sure there aren’t any old accounts or items that shouldn’t be appearing anymore because they’re many, many years old as well. Promptly file a dispute for any and all of the mistakes you do find.

2. Fix What You Can

Once you’ve corrected any errors on your credit report, it’s time to start improving it. Start with the items you can do something about right now. Pay off as many older debts as you possibly can. If late payments have been a problem for you lately, work on bringing yourself back up to speed. Pay down any outstanding balances, or make arrangements with your creditors to do so over time. Take precautions to make sure future payments are made on time by setting up automatic payments or signing up for alerts. Most creditors and service providers let you shift the dates on which payments are due as well, so set yours up in a configuration that will be easy for you to stay on top of.

3. Come Up With an Action Plan

Once you’ve taken care of what you can in regards to your credit report, it’s time to come up with an ongoing plan to take care of the rest. Not only is getting on top of things the best way to get your balances moving in the right direction, but being as reliable and consistent with your payments as possible will look good to anyone who needs to look into your report for any reason. Do your best to keep credit card balances as low as possible, and work on paying off as many accounts as you can as soon as you can. Avoid closing old accounts or opening new ones simply because you’re looking for a quick and dirty way to get your score up. In the end, it’s much more beneficial to focus on reducing your overall debt.

4. Do Use Credit Wisely

Many people wind up taking a “never again” approach to credit once they get their debts under control, but it’s important not to make this mistake. Not having any credit at all can make you seem as risky as bad credit can. Instead, you want to create a credit history that shows creditors you know how to use credit responsibly. Open a credit card if you don’t have one already, use it to make small purchases each month, and then pay the balance off again as soon as possible. If your credit isn’t yet good enough to qualify for a standard revolving account, try applying for a secured credit card or looking into options meant specifically for people with bad credit instead. Any credit account at all will help you improve your score so long as it’s used wisely.

5. Don’t Submit Too Many Applications

Late payments and misuse of existing credit aren’t the only things that can negatively affect your credit score. Even simply applying for additional credit can ding your rating, as this qualifies as a hard inquiry. (Soft inquiries, as with self-checks on your own credit, do not negatively impact your score, although many people mistakenly believe that they do.) If you’re ultimately looking to obtain more credit, make sure you time your application attempts carefully. The effects of a hard inquiry tend to last between six months to a year, and the inquiry itself will drop off of your report altogether within two years.

6. Exercise Patience

Last but definitely not least, it’s important to be patient with the process. It probably took you a while to develop a bad credit score, and it will take time to build a good one as well. Keep focusing on wise credit use, maintaining a low rate of overall credit utilization, and paying all of your bills on time. It won’t be long before you start seeing that score climb into favorable territory.

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