It’s January, which means you are probably well on your way to upholding those New Year’s resolutions that you made a few weeks ago. The start of a New Year is always a great time to start thinking about the future. Perhaps 2013 is the year you want to get married, start a family, or purchase a new home or car. While you don’t need a good credit score to get married or start a family, you’ll be much better off applying for a new credit card or purchasing a new home or automobile if you have a healthy credit score. Understanding credit reports isn’t always the easiest thing in the world, but there are some simple rules of thumb that you can adhere to that will boost your credit score.
Five simple ways to increase your credit score
- Keep all your old credit cards open. There’s no reason to close an old credit card account unless you’re saddled with a very high annual fee on that credit card. The reason for this is that closing you old credit cards has the potential to shorten your credit history, which can harm your credit score. Creditors like to be able to see as long of a credit history as possible when deciding whether or not to give you a line of credit, so keep those credit cards open.
- Always keep an eye on your credit score. It’s a great idea to get a monthly credit report, and to monitor your score so that you know if there are any changes made to your credit report. There are free services such as Credit Karma that will monitor your credit score for you and alert you if there are any inquiries or changes that you should know about. If you see an excessive dip in your credit score, seek out the best credit repair services for you and allow them to help you raise your credit score.
- Don’t miss any payments. Missing a payment on a credit card or any other bill tied to your credit score such as a cell phone bill or car payment will hurt your credit score. Set up automatic payments with your creditors so that you never miss a payment. If you do not want to set up auto payments, you can usually set up some sort of email or text alert to let you know when a payment is due.
- Use less credit than you need to. You can improve your credit score by using less credit than you need to. This means if your credit card has a credit limit of $10,000 for example, you would use less than $3,000 per month. Credit bureaus like to see that you are using less than 30% of your available credit, and it will help your credit score. If you use all the credit available to you each month, you are seen as more of a credit risk.
- Space out your credit applications. Credit bureaus do not want to see a bunch of hard inquiries on your credit score in a narrow period of time. If you are applying for a mortgage, auto loan, or rental, it’s a good idea to space these out by several months each so that your credit score isn’t harmed.
This article was written by Logan Abbott.