Having a good credit score is important for so many reasons. From getting approved for a loan to being able to rent an apartment, your credit score has a huge impact on your financial life. But if your credit isn’t where you want it to be, don’t worry – there are easy ways to increase your credit score. Let’s take a look at some of the simplest steps you can take today.
What is a Good Credit Score?
A good credit score ranges from 700-749 for most lenders. This number indicates that you are responsible with your finances and are likely able to handle taking on more debt. Generally speaking, the higher the number, the better—scores over 800 are considered exceptional.
The Benefits of Increasing Your Credit Score
Having a good credit score can pay off in big ways when it comes time to purchase your home. A higher score may qualify you for lower down payment requirements, which would be beneficial if you don’t have much saved-up cash for a down payment. Additionally, having a high credit score can result in significantly lower interest rates; this means more money in your pocket over time as higher interest rates add up quickly! Even just increasing your credit score by several points can make all the difference when it comes time to apply for a loan or mortgage rate.
How You Can Increase Your Credit Score
Pay Your Bills On Time
One of the most important behaviors that affects your credit score is paying bills on time and in full. This means all of them – from car payments and rent to student loans and utility bills. Late payments not only tack on extra fees but they also show up on your credit report, leading to a decrease in your overall score. If you need help keeping track of due dates, set up reminders or automatic payments if possible.
Reduce Your Credit Utilization Ratio
Your credit utilization ratio is how much debt you have compared with how much available credit you have – both overall and per account. A good rule of thumb is to keep it below 30%. For example, if you have access to $10,000 in available credit across all accounts, try not to exceed having $3,000 in debt across those same accounts at any given time. Paying down balances can make a big difference in this ratio which will then positively affect your score.
Check for Errors
Mistakes happen – even on our credit reports! It’s always a good idea to check for errors such as incorrect balances or late payments that haven’t been accurately reported by lenders or creditors. If you find any errors like these, contact the creditor or lender directly and work with them to get the mistake corrected as soon as possible so it doesn’t negatively affect your credit score going forward.
Improving your credit score doesn’t have to be hard! By setting up reminders for bill due dates and reducing your debt-to-credit ratios while checking for errors along the way, you can take simple steps now that will pay off later when it comes time for bigger purchases like homes or cars.