In the aftermath of the recent recession, many people are seeking ways to boost their credit scores to prove their creditworthiness. Your credit score can range from extremely low at 300 to high at 850. To increase your score quickly toward the desired number, consider these five methods
Pay Your Bills on Time
This may seem like an obvious suggestion, but paying your bills every month on or even before the date they are due can raise your credit score considerably. If you’ve had problems in the past paying large bills, speak to whom you owe money to about payment arrangements. If you have difficulty paying utility bills because of a temporary financial hardship, ask your utility companies to refer you to their hardship department and seek out crisis or grant programs through your local social services. If you’re on the go a lot, or simply forget to pay your bills, set up automatic payments to draw from your savings or checking account.
Reduce High Credit Card Balances
One thing to remember about credit scores: your credit score is greatly impacted by the balance on your credit card. A high debt to credit ratio could have a negative impact on your score. Make an effort to pay more than the minimum owed every month on a high credit card balance to pay it off as quickly. Once you have reduced the balance, try to keep it low so that the amount you owe is only about 10 percent of the total credit limit.
Keep Your Credit Cards
Many credit card users close their cards immediately after they pay off their balances because they feel this will improve their credit score. The truth is that people who maintain non-delinquent credit card accounts for many years show that they are financially responsible and; therefore, their credit scores are higher than those who open and then close credit cards in shorter time frames. Unless you pay a yearly fee for your card, keep it, use it once every one to two months for something small, pay it off immediately and retain the credit limit for emergencies. If you’re concerned about impulse shopping, call your credit card company and set a limit as to how much you can spend.
Check Your Credit Reports
Preventing any negative hits to your credit report is another way to keep everything up to standards. Check your credit reports from the three top credit reporting agencies (Experian, Equifax and TransUnion) regularly and correct negative credit issues immediately. Sometimes a bad credit score is the result of companies failing to accurately report payments or remove old debts after they are paid in full. A bad score can also occur because of records of non-payment or credit balance that resulted from identity theft.If you find that you are a victim of identity theft, you will want to notify all of your credit card companies and banks. This will start the process of repairing and reversing any damage done to your credit.
Andrew Greene is a freelance writer and blogs for debtmanagement.org.uk where you can get help with debt management.