How to Improve Your Credit Score

Sun, Jun 9, 2013

Financial Advice

If you find yourself with a less-than-desirable credit score, it needn’t be the end of the world as there are numerous ways of improving your score.

It can sometimes seem like an impossible task if you’re stuck in a quagmire of late payments and old debt, but here are some tips that you might find useful in building a better credit profile:

  • Establish Where You Stand
    The first step in improving your credit score is to figure out exactly what it is so you know how dire the situation is and what measures you’ll need to take to fix it.
    Services such as Experian and myFICO.com can provide you with a clear idea of where you presently stand.

  • Get a Credit Card
    Having a credit card does not necessarily mean racking up a big balance. Having a couple of cards and consistently paying off the balance in full each month can be a very popular method of boosting one’s credit score, and if you have a particularly poor profile there are credit card companies that cater specifically to those looking to start small and rebuild their rating.

  • Take out a Small Loan
    Much the same as the credit card method, taking out a small loan and repaying it in instalments shows that you are solvent and can consistently manage your funds and pay your debts.

  • Dispute Past Issues
    If you have ever had disputes with lenders or service providers in the past, they may have resulted in the debt being passed to a debt collection agency. If this is the case, you can carry on disputing the old issue or disputing the account as a whole and marking it as “not mine” with credit agencies.
    As a general rule of thumb, the smaller and the older the issue, the less likely it is to be verified as a valid charge when the credit agency assesses it.

  • Don’t be a Big Spender
    The best way to take advantage of a credit card is to never rack up a huge balance as doing so can negatively impact your score even if you pay the bill in full each month.
    Staying within 25% or less of your credit limit will usually do the trick, and many credit card providers will offer a notification service letting you know when you are within a certain range of your limit so you can tighten things up.

  • Don’t Reduce Your Credit Limits
    Generally speaking; you want to keep your credit limit as high as possible because in the eyes of credit agencies, this means that the gap between your balance and your limit will be wider.
    This can damage so unless you are specifically requested by one of your lenders to lower your credit limit, perhaps as a condition for taking out an instalment loan, it would be best not to change anything and let your amount of available credit remain as large as possible.

Oliver Harding has written many articles about business for www.thebestdiscountcodes.com. Over the past year, he has provided content about money management tips for freelancers, how to save money for holidays and frugal living.

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One Response to “How to Improve Your Credit Score”

  1. Simon | Modest Money Says:

    You put it quite succinctly, a bad credit card score shouldn’t be the end of the world! There are worse things that can happen. I think rebuilding a credit card score is first and foremost admitting our shortcomings and being willing to face and correct them. If I might add something, I think making more than the minimum payment on the credit card balance each month might go a long way in raising trust/confidence levels with credit card companies and might ultimately raise ones credit profile by making them lower risk. Wonderful post Oliver!
    Simon | Modest Money´s last blog post ..June 2013 Blog Update

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