Tricks to Boost Your Credit Score
You may not give your credit score a second thought on a day-to-day basis, that is, until it is the day you decide to buy a new car – or apply for a mortgage – and realize the disparity between your expectations and reality. A less than perfect credit history by no means requires you to surrender yourself to less than favorable loan terms and a lifetime of high interest rates. Instead, before you commit yourself to significant investments like a new home or car, allow yourself some time to get prepared. The good news is there is a lot you can do to improve your credit score even in just one year. Try adopting some of these habits now and in no time at all, you’ll be able to boost your credit score.
Streamlining Your Accounts
Charging small amounts using a number of different cards can really kill your credit score. For one, the more accounts you have to manage the harder it is to keep track of all your payments; this means you are more likely to miss payments all together and find yourself riddled with late fees. Additionally, the more cards you have with a balance, the more your score will suffer. Instead, you should try to streamline your accounts and stick to one or two cards that have the best terms for your current situation – and also, the best rewards.
Be Careful Closing Old Accounts
Your credit score is also based on the average length of your credit history, which can be adversely affected depending on how quickly you close your old accounts. You may find certain credit issuers will threaten to close accounts if they have been inactive for a certain amount of time. Try to avoid having any of your oldest accounts closed due to inactivity; doing so can dramatically shorten the length of your credit history. Instead, just use these cards from your older accounts for just one purchase every month or so and pay the balance off immediately after.
Pay on Time, All the Time
Making payments on-time seems like a no brainer, but it’s a lot easier to miss making routine and regular payments, such as your utility bills, for example, than you think. Payment history accounts for about 35 percent of your credit score and includes everything from payments you make just a few days late to missed payments turned over to collection agencies. The longer your record of punctual, on-time payments grows, the less past blemishes will affect your score.
It’s easy to stay on top of your credit history by requesting your annual free credit report from the three credit-reporting agencies: Equifax, Experian and TransUnion. You should carefully review each report annually as well for any mistakes, inaccuracies as well as potential incidences of identity theft – all of which can wreak havoc on your score unfairly.