An excellent credit score is the ultimate goal of the financially responsible consumer. Those three magic digits tell a story of accountability, good financial sense, and the ability to spend mindfully. A great credit score also unlocks doors for large, affordable loans, employment opportunities, and more.
Achieving and maintaining an excellent credit score is easier said than done. There is no quick and easy way to dramatically boost your score overnight, but you can take steps to increase your credit score gradually. Below, we’ve listed five ways to start amping up your credit score today.
Your payment history is the most critical factor in determining your score. A missed credit card payment can significantly impact your score, and it can take months to recover the loss. Set a reminder a few days before your bill is due to ensure you pay on time.
Another crucial factor in your score is your credit utilization ratio, which refers to the amount of available credit you use. It’s best to keep your utilization under 30% or even 10% if you can swing it. For example, if you have $50,000 of available credit, try to keep your usage below $15,000 at most and, ideally, below $5,000.
It can also be a good idea to accept offers of increased credit or to request an increase on your own, which can instantly bring down your credit utilization ratio. However, only go this route if you know you are not at risk of overspending as soon as you have more credit at your disposal.
Taking a pair of scissors to credit cards can seem like the perfect way to increase your credit score, but you need to use your cards to keep your score high. A great way to ensure you use your cards occasionally but don’t overspend is to charge fixed expenses, like monthly subscriptions, to your card. Just be sure to pay the balance in full before the credit card bill is due.
If any of your cards are carrying a balance from month to month, showing that you are working to get rid of this debt can do wonders for your credit score. Maximize your monthly payment by trimming an expense category in your budget and channeling that extra money toward your credit card bill. Don’t be afraid to ask your credit card company for a lower interest rate as you work to pay off debt. Finally, consider consolidating credit card debt with a personal loan from Azura Credit Union, which will help you get rid of your credit card debts and leave you with one low-interest payment to make each month.
A fraudulent charge on your credit card can bring down your score without your knowledge. That’s why it’s essential to check your monthly statements and look for charges you don’t remember making. Contact the credit card issuer immediately to dispute the charge if you see anything suspicious. It’s also a good idea to get your free credit report once a year from annualcreditreport.com for a more comprehensive look at your credit usage and signs of possible fraud.
Credit scores are a crucial component of financial wellness, but achieving and maintaining a high score can be challenging. Use the tips outlined above to start boosting your score today.