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Simple Ways to Improve Your Credit Score

By Janet Lacey
Published: Sunday, July 21st, 2013

When you apply for credit, whether for a car loan, mortgage, or a credit card, the lenders will want to know the risk they are taking in lending the money to you. A credit score helps the lenders to evaluate your credit report, as it is a number that summarizes your credit risk based on a picture of your credit report at a specific point in time. As such, it is undoubtedly very important to have a great score in order to enjoy better interest rates on loans. Precisely, the higher the score the better you fare at any financial institution. In fact, these days’ even employers check credit score to assess the applicant before hiring. It would definitely have a negative effect if you have a bad score.

Here are some handy tips that you can use to improve your credit score:

One of the easiest ways of improving your credit score or repairing your credit score is by checking your credit report for any errors. Request for a free copy of your credit report and vet it for any errors. In particular, confirm that the amounts owed for each of your open accounts is correct and that there are no late payments erroneously listed on any of your accounts. If you discover any errors, dispute them with the reporting agency and the credit bureau.

You also need to keep the amount of debt you owe under control. Generally, the less debt you have, the better. If possible, you need to use less than 10% of your credit limit. This is easier said than done, and you may therefore need to come up with a good debt management plan to help you manage your debts.

Another plausible way of boosting your credit score is through micropayments. Instead of waiting to pay your bill all at once, you can make little payments throughout the month. This helps your score because micropayments lower your debt utilization ratio, which accounts for about 30% of your credit score.

Making your credit payments on time is another technique of boosting your creditworthiness. As such, you should consider ways of achieving this such as using payment reminders or enrolling in automatic payments.

Since your credit score is a very powerful number, you need to manage your credit responsibly over time in order to get a better score. These tips offer some of the easiest techniques of improving your score.

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