Having a high credit score is important if you wish to apply for a mortgage or just a personal loan. Several factors impact your credit score and they can stay on your credit report for a long time.
If you are looking to improve your credit score, here are a few tips.
Pay your bills on time
Paying your bills late will negatively impact your credit score for as long as seven years. If you wish to have a higher credit score, make sure to always pay your bills on time. This applies to your utility bills or your credit card bill. A late payment is hard to remove from your credit report unless you can prove it was caused by a hardship like hospitalization or a natural disaster.
Pay attention to joint accounts
Having a joint account can be both beneficial and detrimental. When you open an account together with another person, you are co-scored. If you have a joint account with someone who has a poor credit history, their credit score of the other person can negatively impact your own credit score. On the other hand, if they have good credit it can lift yours. It’s important to be aware of this factor when you have or are thinking about opening a joint account.
Keep your credit utilization low
The credit utilization refers to the percentage of your credit limit that you are using. For a better credit score, you should aim to use a lower percentage of your credit, ideally somewhere under 30%. A good way to make sure you keep your utilization low is to always pay your credit card balances on time and in full. The percentage is calculated on individual cards and overall so if you’ve already used close to 30% on one card it’s a good idea to use another one if you have it.
Keep unused credit cards open
This point is related to credit utilization. If you have a credit card that you are not using and your balance is paid in full, keeping it and using it now and then can help lower your overall credit utilization. Just make sure to always pay off your balance.
Avoid opening additional credit accounts
While having more than one credit is great to mix it up, you may want to avoid opening a new credit account for a while if you are trying to improve your credit score. This can not only lead you to spend more but also to more hard inquiries, which leads us to the next point.
Avoid making too many hard inquiries
Applying for a credit creates what are called hard inquiries, which are added to your credit report. Having too many hard inquiries can lower your credit score and stay on your credit report for two years.
Check your credit report for inaccuracies
Simply enough, make sure to regularly check your credit report, and if you notice any inaccuracies dispute them. While this may happen rarely, it’s useful to always keep an eye that everything on your credit report is accurate.
Find a strategy to pay off your debt faster
Finally, if you have a lot of debt, find a strategy to pay it off faster. Making micropayments (frequent small payments) or paying off more than the minimum monthly amount may be ways of improving your credit score. There are several ways to tackle your debt, find the strategy that works best for you.