How to Improve Your Credit Score
Your credit score is a three-digit number that shows how responsible you are when you borrow money. The score considers your financial history and predicts how likely you are to repay debt. The higher your credit score is, the more likely you will get approved for loans and credit cards with lower rates and favorable terms.
How Your Credit Score is Calculated
There are a number of factors that are used to determine your credit score, but the most important factor is payment history. Every time you miss a bill payment, your credit score will likely go down, while maintaining a history of on-time payments can increase your score.
Another essential factor is credit utilization, which shows how much of your available credit you're actually using. Your credit utilization ratio equals your current debt balances divided by your total credit limits. To lower your credit utilization and improve your credit score, pay down your debt or open a new credit account to raise your credit limits.
How You Can Improve Your Credit Score
Wondering how to improve your credit score? Here are some tips to help you out.
Pay Your Bills on Time
Make every effort to pay your rent, mortgage, car loan, and other bills on time, every time. If you're worried you may forget a payment, sign up for automatic payments or set up calendar reminders on your phone. Even one missed payment can lower your credit score, so this is the best way to improve your credit.
Pay Off Your Debt
Less debt can lead to a lower debt utilization ratio and higher credit score. Therefore, it's a good idea to pay off any debt you may have. To do so, pick up a side gig, cut your expenses, or live on a strict budget where you only spend money on essentials.
Keep Your Balances Low on All Credit Cards
Be mindful of how much you charge to all of your credit cards and keep your balances as low as possible. If you're using 30% or more of your credit limit on one card, make a payment or switch to another credit. You may want to get rid of your credit cards altogether if you constantly overspend.
Be Careful of New Credit
If you recently took out a car loan, don't apply for a personal loan shortly after. Opening too many credit accounts at once can cause your credit score to go down, especially if companies make a hard inquiry into your account every time.
Dispute Any Credit Inquiries
Visit AnnualCreditReport.com to get free copies of your credit reports from the three major bureaus, Equifax, Experian, and TransUnion. If you notice any errors or inaccuracies, dispute them with the appropriate bureau.
How to Get a Loan Without a Good Credit Score
If you don't have time to improve your credit score and need some cash to cover an immediate expense, Advance America can help. We offer a variety of loan options and may approve you with any credit level including fair or even bad credit. Our payday loans, installment loans, and other online loans can help you meet your short-term financial goals with ease.