Having a strong credit score is essential when you are considering purchasing a home or applying for a mortgage. Financial institutions rely on your credit score to assess your credit worthiness and the level of interest rates you’ll pay on your loan. If you are looking for ways you can improve or maintain your credit score, here are five tips that will help you out.
1. Pay your bills on time: Missing or late payments can significantly affect your credit score. Ensure that you pay all your bills (credit cards, mortgage, utilities, etc....) on time. if you need help managing your bills, try setting up auto payments, or reminders for upcoming payments.
2. Keep credit utilization low: Credit utilization is the amount of credit you ‘re using vs the amount you have available. Having a high credit utilization will damage your credit score, so aim to keep it as low as possible. Keeping your utilization at 30% or below is the ideal percentage for a healthy credit score.
3. Avoid closing old credit accounts: your credit history plays a big part in your credit score, the longer the better. If you have old accounts in good standing, leave them open. Closing older accounts will shorten your credit history, and knock your credit score down.
4. Check your credit report regularly: Check your credit report on a regular basis. Your credit report is an account of your credit history, containing details of all sorts of important factors of your credit score, such as payment history and credit accounts. This is why you need to periodically check your credit report to detect any errors or fraudulent accounts.
5. Don’t open too many new accounts at once: every time you apply for a credit card, it results in a serious inquiry on your credit report, which can temporarily lower your credit score. Opening multiple accounts in a short time will also make you appear risky to lenders. Try to limit the amount of cards you apply for in a short period of time
Improving your credit score isn’t something you can do overnight, it takes time. Following these tips can help you to get started on achieving a score you can be proud of. Be patient, and stay focused on your goal, and you’ll be just fine.