5 ways to improve your credit score

improve your credit score

There are many ways to improve your credit score and it is a great exercise to undertake, especially if you’re planning to apply for a major purchase, such as a new car or home, or try to qualify for one of the best rewards cards available.

Here are 5 ways to improve your credit score

Pay your bill on time

Missed payments will result in a credit score drop. Make sure to pay at least the minimum payment on time every month to avoid this consequence.

Pay your balance in full each month

While only your minimum payment is required in order to avoid late payments, it is recommended you pay your balance off in full each month in order to increase or maintain your credit score. Making sure you pay your balance in full also ensures you do not incur interest fees.

Whenever possible, pay your balance off in full.

Maintain the age of your credit history

The older your average credit age, the more favorably you appear to lenders. Those who have just started building credit have not yet built credibility and trustworthiness. Those with longer credit histories can potentially show a long record of positive behaviours.

Keep your credit utilization under 30%

This refers to the total amount of credit you’re using monthly. The goal is maintain under 30% of your total available credit.

This means that if your credit limit is $1000, you should never go above $300.

If your credit limit is $2000, your credit uitilization number now raises to $600

Want an easy way to calculate this? Multiply your credit limit by 0.3 ($1000×0.3=$300)

Minimize requests for new credit

Anytime a new request for a new credit account is opened, your credit record is impacted. The occasional inquiry probably won’t have much of an impact, but frequent inquiries will result in a drop. Financial institutions may see frequent requests as a sign that you’re facing financial difficulties and therefore may be considered a risk.

Keep in mind simply checking your credit history yourself, or a landlord or employee conducting a credit check will not impact your score.

The bottom line

Improving your credit score can take weeks or months, but it’s an important activity to undertake. 

Want to find out your current score? Try Credit Karma for free.

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