Securing Your Future Financially: Top 5 Tips To Raising Your Credit Score

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Were you aware that nearly 12% of US citizens had a credit score below 550 in 2016?

A credit score below 550 is considered to be bad. If you’re in this situation, you need to learn a few tips on improving your credit score in the future.

However, Americans are making incremental progress when it comes to managing their finances. in 2009, nearly 16% of US citizens had a bad score rating, so it has improved a lot since then.

Having a bad credit score makes it nearly impossible for banks and companies to offer you loans or trust you.

Luckily, you can do a lot of things to prevent having a poor score. If you already have it, you can also do a lot of things to improve your rating.

Your credit score cannot be improved overnight, but this shouldn’t discourage you. Here is what you have to do to ensure score improvements in the long run.

Each citizen can obtain his or her credit report for free.

You should complete the Annual Credit Report Request Form with your personal information and you’ll have it in a few days.

Why it’s important to get your credit report? Because banks and money lenders can often make mistakes and you can get penalized accidentally. Once you have your report, take a look at the late payments, see if dates are correct and check for typos and common errors.

If you see something wrong, don’t hesitate to contact the bank or lender in question. Maybe the creditor in question made a mistake and this simple phone call can boost your credit score back.

Having late payments is not good for your credit score.

However, many people get into the habit of having late payments and this can happen to nearly anyone. Still, the good thing is that most creditors don’t report a 30-day late payment.

You should take advantage of that and pay your bills right away. A 30-day late payment might not get reported right away, but all 60-day payments are immediately communicated to the credit bureaus. Therefore, don’t have late payments older than 30 days because they can drastically affect your score.

They say you cannot hit a target you cannot see and this is completely true, especially when it comes to your credit score.

If your current rating is below 550, set a goal to achieve a certain credit score in the upcoming months. For example, you can aim to bring your score to 650 in the next three months.

This is not an unachievable goal and it will motivate you. People who have credit score goals channel all their energies and spending habits to improving their score and this will help you as well.

It’s important to know that nearly one-third of your credit score is influenced by how you pay your bills.

In other words, if you don’t pay on time, your score can drop significantly from month to month. Many people don’t pay on time not because they don’t have the money, but they simply forget to make these payments.

don’t let that happen to you. There are numerous apps you can use as well as banking tools to set up automatic payments. Make a list of your bills and prioritize them by importance and deadline. Set up automatic payments for your most important bills and your credit score will be markedly improved in the near future.

Getting on more credit is not a good move if you want to improve your credit score.

This is seen as taking on more debt and since you already have a poor rating, more debt means an even smaller chance of ever improving your score. Therefore, make sure that you don’t attempt to get loans from creditors until you have handled your current financial situation.

Fixing your credit rating is not impossible, but it takes dedication and discipline. It’s a long term goal, but the benefits of improving your credit score are huge.

For example, one benefit of having a good credit score is to secure lower interest rates when getting loans. At the same time, you can also get higher credit card limits if you aren’t showing signs of financial risk.

To reap such benefits, you need to stay motivated on improving your credit card score and learn more on how to avoid being penalized by credit bureaus. This might take six or twelve months (or even more in some rare cases), but it’s totally worth it, so be prepared for the long haul.

Your credit utilization rate reflects the ratio of your balance correlated to the credit card limit.

For example, having a balance of $10,000 on a card with a limit of $15,000 means a utilization rate of around 66%. that’s too much and considered risky. It shows that you spend money very close to your credit card limit and creditors don’t usually see this with good eyes.

Ideally, you should aim for a credit card utilization rate of 30% or below. This means that if your credit limit is $15,000, you shouldn’t spend more than $4,500 each month.

Keep in mind that your credit utilization rate is the second biggest factor of influence when it comes to your credit score, so you need to pay close attention to it.

By following these tips, anyone can improve his or her credit score in the upcoming future. Just make sure to implement these strategies for the rest of your life to avoid having a poor credit rating again.

Also, for more financial tips and tricks, check out our blog articles on managing money and learn how to become an expert when it comes to your spending habits!

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