Your credit score is one of the most important numbers in your life. It can affect how much you pay for car insurance, how much you can borrow for a mortgage, and even how high your electric bill will be each month. Thankfully, there are many things you can do to improve your credit score easily. This blog post will cover some of the best tips and ideas for improving your credit score quickly and at no extra cost. In fact, following these tips could save you money over time!
Ways to Improve Your Credit at No Extra Cost
While there are a lot of things you can do to improve your credit score that cost you money (such as taking out a loan and paying interest over time), there are actually many things you can do for free to monitor and improve your credit for no extra cost to you.
1. Make Sure You Pay Your Bills On Time
This is the single most important thing you can do to boost your credit score. It’s best to pay all of your bills before they are due or as soon as they arrive. Setting up automatic payments can help you keep up without needing to constantly track and make sure that everything is paid on time.
Traditionally, it’s only credit account payments that affect your credit score. These days, though, tools like Experian Boost allow you to apply your good payment history for utilities and telecom bills toward your FICO credit score.
Credit bureaus and creditors hate to see late payments and missed payments on your record, so avoiding this issue entirely with only on-time payments is your best bet for achieving a great credit score. If you have fallen behind, getting caught up on your payments can have a substantial positive impact on your credit score.
2. Monitor Your Credit Score With A Free Report
It’s important to ensure that all the information on your credit report is accurate. If you find any errors, contact the credit bureau and have them corrected immediately. This keeps your credit score accurate and ensures you get vital feedback on how your activities affect your credit score.
As an added bonus, many free credit report platforms, such as Credit Karma, offer specific suggestions for how to improve your credit score in addition to reporting the various factors affecting your score. This means that you can get customized advice based on your unique situation.
3. Open New Credit Accounts
The most common reason fiscally responsible people sometimes have lower credit scores is that they don’t have an adequate history or portfolio of credit accounts. While activities like paying utilities can help you build your credit initially, it doesn’t do nearly as much for your score as regularly paying on credit cards and loans. Getting one credit card will do more for your credit score than years of paying your electric or other utility bills on time.
The Sooner, The Better!
It’s not just a matter of having credit accounts, it’s also a matter of their age. The older your credit is, the more it positively affects your credit score. Opening a new credit account today will continue to yield ever more positive effects on your credit over time.
4. Pay Off High-Interest Debt ASAP
High amounts of debt can really drag down your credit score. In general, it’s considered “excellent” to have 10% or less of your borrowing power Debt also continuously accumulates interest, which means that the longer you keep your debt, the more debt you’ll have to pay off. By paying down credit cards, mortgages, and any other debt more quickly, you can save tens, hundreds, or thousands of dollars and boost your score at the same time!
5. Ask Your Creditors For Higher Limits
Especially if your income has increased or you’ve had a card with the same limit for a long time, you may qualify for a higher borrowing limit than you currently have. Increasing your borrowing limit effectively reduces your credit utilization percentage, which strongly affects your credit score.
6. Become An Authorized User On An Older Credit Card Account
If you’re a young person just starting out, one way to really quickly and dramatically improve your credit is to be added as an authorized user on an existing credit card account. This increases your effective borrowing limit, your credit history, and the number of accounts you have, all without a hard credit check that can lower your score. Even if you never actually make a purchase on an account you’re an authorized user for, it will have a substantial positive impact on your credit score. This is a great way savvy parents can help their children build credit without spending a dime.
Struggling With a Low Credit Score?
Many Americans struggle with having a low credit score that holds them back from owning a home or buying a car. The good news is that if your credit score is quite low, it can improve more easily than if your credit is already high, which can make it hard to improve the score. If you follow these tips, you will see a noticeable improvement in no time!
How Your Credit Score Affects Your Mortgage Rate
Your credit score is one of the major factors considered when lenders decide how much interest to charge you for a loan and how much you can borrow. A good credit score can save you hundreds or even thousands of dollars since it will give you access to lower interest rates. On the other hand, if your credit score isn’t great, you may have more difficulty obtaining a loan at all.
Like any other mortgage lender, Integrity Mortgage, LLC (NMLS #1692497) considers many factors when determining your mortgage borrowing power with pre-approval.