A good credit score can open doors. Not only can it help you get approved for a home mortgage, car loans or other major purchases, it also may make you eligible for new employment opportunities and even lower your insurance rates. If you have a less-than-perfect credit score, don’t despair. Here are five things you can do to raise your score:
- Pay your bills on time: It may sound simple, but the importance of paying your bills on time cannot be over-emphasized. Over time, this will help to improve your credit score.
- Verify your information: There could be erroneous information contained in your credit report. If you find inaccurate or out-of-date information, contact the company that issued the credit score rating and take appropriate steps to have any issues corrected.
- Use your calendar when shopping: When you apply for credit, it causes a small dip in your credit score. That dip in credit can last up to a year. Certain kinds of loans—auto loans, mortgage, and student loans—have scoring formulas that allow for the fact you will be making multiple applications for credit during a short period of time. What that means is that in terms of credit reporting, all of those multiple loan applications will usually only count as one inquiry. If you cluster your requests for credit — your purchases —with a one-month or less time frame, you may reduce the hit to your credit score.
- Communicate with creditors: If something unexpected happens and you know that a payment is going to be late, contact the creditor immediately and make arrangements. Taking proactive steps to prevent delinquency reporting will go a long way in not only improving your credit score, but also in establishing a favorable relationship with your creditors.
- Contact a free credit counseling service: Contact a free credit counseling service for advice on how you can clear up any outstanding debt and ways to keep any future debt problems in check.
Cleaning up your credit is going to take some time but it is well worth the effort.