A good credit score is crucial for those looking for a mortgage, interviewing for jobs, renting an apartment, and applying for car loans. Many people have a credit score that’s below average, barring them from accessing various financial assistance options. The good news is that even if you have what is considered a low credit score, you can still raise it with the following techniques.
Pay Bills Quickly
One of the most effective and common ways of raising a credit score is to ensure you pay your bills on time. This works better if you maintain your payment history. The payment history makes the biggest part of calculating your score, and maintaining a good history puts you on top of the scale. To ensure that you’re never late with a payment, you can always set automatic payments or calendar reminders so as to ensure you don’t forget to pay any of your bills. Lenders will always look at how reliable you are in bill payment and use that to decide whether to lend you money or not. If they choose to lend to you, your credit score will also help them determine how much money to loan.
Analyze Your Credit Report
It is important to analyze your credit report often with various bureaus. You should note that sometimes there can be errors in your credit report, and if you don’t check them from time to time, you can spot the mistakes when it’s too late. Incorrect reports can have a negative impact on your score. It can drag your score down and interfere with your chances of getting a loan. It is, therefore, important to also investigate all your credit inquiries; too many inquiries also negatively affect the score. Taking the time to investigate credit inquiries may allow you to raise your credit score. If you find any inaccuracies, you should dispute it immediately and ensure that the information has been corrected.
Avoid Closing Unused Credit Card Accounts
The longer you have credit established with one lender, the higher your credit score will be. You will get rewarded handsomely for having a long and positive history with one creditor, and this happens even when the account is inactive. This means leaving those accounts open will not have any negative impact, but it will ensure you increase your chances of getting a loan. However, you should ensure that all the open credit card accounts are not costing you money when you leave them open.
A low credit score might prevent you from getting a loan. Even if you manage to get a loan, you will have to deal with high-interest rates. It is, therefore, important to keep it up even when you don’t plan on getting a loan anytime soon.
If you want more information on financial literacy, check out this other article: 4 Tips to Keep in Mind When Paying Bills Using a Loan