Your credit score is an important factor in your financial life, as lenders use it to help them decide whether they’ll be repaid on time or not if they grant you a loan or credit card. You are more likely to qualify for credit cards and loans at the most favorable terms if you have high scores.
Follow these tips to improve your credit score:
Pay Your Bills on Time
When lenders request a credit score for you by reviewing your credit report, they want to know how reliable you are when it comes to paying your bills. This is because generally, past payment performance is usually considered a good predictor of future performance.
By paying all your bills on time as agreed each month, you can positively influence this credit scoring factor. Settling an account for less than what you agreed to pay originally or paying late can affect your credit scores negatively.
Apart from just any loans, you may have (like student loans and auto loans) or credit card bills, you’d need to pay all bills on time, including your phone bill, utilities, rent, and more.
Get Credit for Clearing Cell Phone and Utility Payments on Time
You can improve your credit score if you’ve been making cell phone and utility payments on time, by factoring in those payments through a free product called Experian Boost.
Using this product, consumers can allow Experian to connect to their bank accounts to identify telecom and utility payment history. After consumer verification of the data and confirmation of adding it to their Experian credit file, an updated FICO score is delivered in real-time.
Clear Your Debt and Keep Low Balances on Credit Cards and Other Revolving Credit
Another important number in credit score calculations is the credit utilization ratio. To calculate this, add all your credit card balances and divide the amount by your total credit limit. For instance, if your total credit limit across all your cards is $10,000 and you charge typically about $2,000 every month, your utilization ratio is 20%.
Look at all your credit card statements from the last 12 months while calculation your average credit utilization ratio. Add the balances for every month across your cards, and divide the amount by 12. This will tell you how much credit you use on average per month.