A huge aspect of your financial life is your credit score — a three-digit number that lenders use to help determine how likely it is they will be repaid on time. The higher your score, the more likely you are to qualify for better rates on your loans and credit cards, which can help save you money. Like many other adults, your credit score history may not be where you want it to be. While it takes time to improve your credit score, the sooner you address the issues that may be bringing your score down, the better chance you have at increasing your score. Here are some tips on how to improve your credit score so that you can have the ability to qualify for better interest rates when you need to borrow money.

Make Your Payments on Time

Lenders check your credit report and request a credit score because they are interested in how reliably you pay your bills. Your past payment performance is considered to be a strong indicator of what your future performance will be. By paying your bills on time every month, you will have a positive effect on your credit score. The opposite is also true — when you pay your bills late, your credit score is negatively impacted.

If you are behind on your payments, it is important to get caught up on the account. This is because every month that your payment is late, your account is flagged. This hurts your credit. Combating late payments with positive credit behaviors is a great way to offset any damage and improve your credit score. If you don’t have the funds to pay your loans or bills due to COVID-19, ask about financial assistance and how to best prioritize your payments.

Try to Increase Your Credit Limit

By increasing your credit limit and keeping your spending relatively similar to previous months, your average credit usage ratio will be lowered, which can help improve your credit score. Your credit usage ratio is calculated by taking your credit card balance and dividing it by your total credit limit.

Speak with your credit card issuer and see if they are able to approve an increase in your credit limit without a “hard” credit inquiry. In response to the coronavirus pandemic, some issuers may be willing to work with you in raising your credit limit.

Make Micropayments

Micropayments are small payments that you can make throughout the month to keep your credit card balance low. Making payments throughout the month rather than at the end of month is a great way to improve your credit, and it keeps your credit usage ratio low.

Keep Accounts Open

If you have a credit card account that does not cost you money in annual fees, then you should leave the account open. This is a good strategy because by closing the card, you lose that card’s credit history and limit, which affects your credit usage rate. Keep the card open and use it every once in a while, which will ensure that your issuer does not close it.

Dispute Inaccuracies on Your Credit Report

Another thing that can be negatively affecting your credit score is any inaccuracies. By going in and fixing these issues quickly, you can make a positive impact on your credit. Once a year, you are able to receive a free credit report from the three major credit bureaus. Use Annual Credit Report to receive reports from TransUnion, Equifax and Experian to check for any mistakes. Be sure to dispute any mistakes that you find in order to get them removed from your credit report.

Whether you are looking to get a new loan, improve your credit or looking for ways to remain financially stable throughout this pandemic, I would love to assist you. Contact me today.

Email me at [email protected], or give me a call at 916.880.8059.