Your credit score is a temperamental little number that plays a big role in your life. You need a decent credit score to rent an apartment, buy a house, purchase a car, and even get a credit card. Although your credit score is such an important number, there tends to be confusion around how to improve it. Whether you are looking to get a credit history established or improve your numbers, there are a few steps you can take.
Check Your Report
Looking at your credit report is a helpful start to increasing your credit score. Not only will you be able to see your current score, but you’ll also be able to see the details of your accounts. Credit reports show open accounts, closed accounts, account usage, payment history, and more. Verify that everything listed is correct, and note what you could improve.
Be an Authorized User
Becoming an authorized user is a fantastic way to start building credit. If you have a trustworthy friend or family member with a high credit score, ask if they would add you to one of their accounts. This helps for two reasons. If they have been an account holder for several years, it increases the length of your credit history. Accounts that have been open longer are more beneficial to your score. You also inherit their payment history in your credit report. More on-time payments mean a higher score. Parents can even make their children authorized users to give them a head start into the credit score world.
Keep Accounts Open
There are a few benefits to hanging on to multiple accounts. Accounts like loans and credit cards can increase the length of your credit history. If you’re 30 years old and close your credit card from when you were a teenager, you may cut over a decade off of your history. Having multiple accounts open can also keep your percent of overall use low. Please note, you only get this benefit if you refrain from heavy spending on your accounts. While it may be satisfying to pay a loan off, doing so can temporarily drop your score. In certain cases, you may be better off waiting to pay loans off in full. However, opening too many accounts too quickly can be detrimental to your score. Find a comfortable balance.
Pay on Time
Late payments are a red mark on your credit history. Make sure all of your bills are paid on time. Bills that affect your score include rent, mortgages, car payments, health insurance, electricity bills, and more. If you have a hard time keeping track of payments, consider using autopay or getting a calendar. Make sure to catch up if you have missed a payment or two. The last thing you want is to get turned into debt collections. Some businesses will let you set up payment plans if you can’t pay the full bill at once.
Talk to a Professional
Credit scores can be daunting. If you’re looking to build your score quickly, consider talking to a professional. Professionals like loan officers will be able to pull your complete credit history and review it with you. They will be able to advise you on the best moves to grow your scores. Letting a professional guide you is the safest way. Once you make a change on your report, you can’t undo it.
Credit scores are an important part of life. Make sure you’re well-educated on how they work. Even if you aren’t looking to make a large purchase now, your score follows you for your whole life. Build good credit habits as soon as you can.