Your credit score matters and can be a problem if you have poor credit. It can reduce your chances for getting credit cards, loans, and other financial help. Thankfully, there are ways that you can raise your credit score.
How to Improve Your Credit Score
- Prompt Bill Payments– Make sure you pay all bills on time. If you make late payments, this impacts your credit score.
- Keep low balances on credit cards – You don’t want to have high balances on your credit cards as a high debt load impacts your credit in a negative way
- Only buy new credit accounts if you need them – You won’t improve your credit score just by having more credit accounts so use only what you need.
- Pay off debt, don’t move your debt around – Don’t close out used credit as a way to improve your credit score. If you have the same debt, but fewer accounts this may hurt your credit score.
Steps to Improve Your Credit Score Now
One of the best things you can do to improve your debt is to pay bills on time. Even if you have small debts, paying bills on time is a good idea. You should make sure your outstanding debt is minimal and that you’re not accruing more debts. Don’t apply for credit that you don’t need all the time.
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If you apply for credit, this shows up on a credit score and lenders may think that you’re adding to your debts. Try to take advantage of credit you already have to show your ability to handle credit in a responsible manner.
Improving Your Score Takes Time
If you have late payments on your credit score or a lot of credit inquiries, just pay off your bills and then wait. Your credit score will improve over time and you can’t fix bad credit right away.
How Your Credit Changes Will Impact Your Credit Score
Some action you take will impact your credit score. There are several factors to take under consideration here. Your credit score is based upon what is found in your credit report. If there’s changes to the credit report, this can impact your credit score.
If you close two accounts for example, this will lower the number of open revolving accounts and will improve your credit score, but this decreases the amount of credit that you have. With less credit, you have a higher utilization rate which is also named the balance-to-limit ratio and this will lower a credit score.
Any change to your credit will impact the credit score, but getting an accurate assessment of what any one change will do to the report is impossible. Credit risk factors which are provided with your credit score are important. These identify which credit elements from your credit history are impacting your credit score and then the right actions can be taken by you to improve your credit score.
The Time it Takes to Rebuild Credit Scores
You don’t rebuild a score, you rebuild your credit history and this is then shown in the credit score. When there’s a negative change the time it takes to rebuild depends on the actual change to the score. Negative changes are things such as a collection account or unpaid bills. This continue to impact the credit score until they have been in the score for a certain length of time.
- Any delinquency is in the score for seven years
- Public record items are in the score for seven years, but some items such as tax liens that aren’t paid or bankruptcies may be in the score for ten years
- Any inquiry into your credit score stays for two years