A low credit score can keep you from moving ahead with major financial goals, such as buying a car or a home. Working to improve your score may seem overwhelming, but it’s less challenging than you think.
In fact, it’s possible to grow your score relatively quickly if you have a strategy for doing so. If you’re hoping to add points to your credit score over the next three months, these tips can help.
Get to know your credit report and score
Credit scores don’t materialize out of thin air; they’re calculated using the information in your credit report. Credit reports are compiled by three companies: Equifax, Experian and TransUnion.
Checking your credit report and score is important because it can give you insight into what’s affecting your credit rating. Late payments and collection accounts, for instance, can drag your score down. Paying your bills on time and keeping your credit card balances low, on the other hand, can help your score.
You can track your free credit score with Credit Sesame and get access to a credit dashboard that shows you what’s on your credit report at a glance. While you’re checking your credit report, keep an eye out for errors which may be hurting your score. If you find one, take steps to dispute it with the credit bureau that’s reporting the information. Getting an error corrected could add valuable points back to your score.
Create breathing room between your credit balances and limits
One of the most significant factors that affects your credit score is the ratio between your total credit limit and how much of that limit you’re using. Ideally, you should be using less than 30% of your total available credit to give your score a boost.
If you’re over that mark, there are two things you can do that can positively impact your score relatively quickly. The first is paying down a chunk of your debt. If that’s not realistic in a short time frame, the other option is requesting a credit limit increase.
Having more available credit can improve your credit usage ratio and potentially raise your score. Just remember that if you have more credit available, not to go charging up new purchases against your increased limit.
Apply for new credit sparingly
Any time you apply for credit, it shows up on your credit report. Each new inquiry knocks a few points off your score. If you’re in credit improvement mode, hold off on applying for new loans or credit cards unless it’s absolutely necessary.
Make credit reviews a regular part of your routine
If a better credit score is your goal, you need to be proactive in seeing what kind of results you’re getting for your efforts. Free credit monitoring services like Credit Sesame can help you track your progress in growing your score from month to month. You can get alerts any time a change is made to your credit report, which can help you develop better credit habits over the long term. And remember, checking your own credit won’t hurt your score.