Having less than stellar credit ratings severely limits your borrowing options, thus reducing your chances of getting approved for a loan, a new credit card, or even for insurance. There could be any number of reasons why your credit score is what it is, but do not fret. There are more ways to fix your credit than you think.
- Keeps tabs on your credit report. Keeping a close eye on your credit report allows you to watch out for erroneous entries that could further ruin your standing. Preventing errors from appearing on your credit report helps maintain and even improve your scores in the long run.
- Pay your bills in a timely fashion. Staying on top of your bills and accounts payables is a really good way to keep your credit score up. One missed payment could be a problem, but more than a few would wreak havoc on your credit report. You might want to consider setting up auto-payments so that you never forget a due date.
- Never max out your credit cards. Even if you are up to date on your payments, maxing out any of your credit cards is never a good idea. Maxing out your credit cards on a consistent basis has a detrimental effect on your credit score. Instead of using one card to its maximum try to spread your purchases across two or more cards if you have them. Ideally, the balance on each of your credit cards should stay well within 30% of the allowed limit.
- Don’t close unused credit card accounts. Contrary to what some people might think, closing out unused credit card accounts will not raise your credit score. Keep in mind that how old your credit card account is affects how you are scored, and that using your old cards every now and then may even help raise your standing.
- Get a secured credit card account. This type of credit card requires a bank deposit as collateral, and can be acquired even if you have bad credit. The limit on your secured credit card is based on your collateral deposit, and showing that you are responsible enough to maintain the account can definitely help raise your score.
- Apply for an installment loan. Getting approved for an installment loan on bad credit won’t help raise your score, but paying the loan back in a timely manner will. If you can manage to get a good mix of loans and credit card accounts that you can pay back on time, your credit score should see a significant improvement in no time.
- Avoid taking out multiple loans. Taking out a loan and paying it back on time does help improve your credit score, but not if overdo it. Multiple loans appearing on your credit report will give a bad impression, thus reducing the chances of raising your credit score. If you need to take out multiple loans, do not apply for them in quick succession.
- Be mindful of your credit limit. The higher your credit limit is – as seen in your credit report – the better. Talk to your credit card company and see if you qualify for an increase in your limit. Report any errors regarding your credit limit, especially if the report reflects a value that is lower than what it should be.
