5 Tips to Increasing Your Credit Score

Raise your hand if you were one of the millions of people who promised yourself you would only use your credit cards for an emergency. Everyone who read this just raised their hand, and that’s because no one takes on a line of credit with the intent of falling into debt. It happens, though and then it’s all downhill unless you follow these 5 tips to increasing your credit score. Here’s how you can do it.

Check your Credit Inquiry

A great tip to raising your credit score in no time is to limit the amount in inquiry on your credit report. Make sure you know who is looking at your credit report and why. Keep in mind other companies might pull your credit report even when you are not applying for a loan. Companies such as auto insurance, life insurance, apartment rentals, employment companies, etc. Therefore if you are not certain that you need a particular service then you should not let them pull your credit. You should also understand the difference between hard and soft inquiries. Soft inquiries will not affect your credit score whereas hard inquiries do. Too many hard inquiry tells potential Lenders that you are desperate for a loan.

Resolve Disputes Quickly

If there are discrepancies on your credit report, it is important to contact both the Creditors and the credit bureaus to resolve the issue. This can help any future problems by preventing that Creditor from making the same mistake twice so you will not have to go through that again.

Take note of where you are getting your credit report from, when you are looking to repair your credit. There are many different places that will offer you a copy of your credit report. It is best to get your copy from the credit bureaus themselves. Visit annualcreditreport.com to get a free copy from each bureau. Having a copy of your credit report is the first step in improving your credit since you will have a first hand look of what is on your file and what you are working with.

Prioritize Your Bill Payment

To avoid hurting your credit when you cannot afford to pay all your bills for the month, prioritize. A single late payment towards a medical bill, a payday loan, or even your electric bill will not hurt your credit in the way that a late credit card payment will. While those late fees may hurt, at least they will not damage your credit score. Paying your bills on time is the ideal way to build and restore good credit. Be sure to pay at least the minimum amount due each month. To avoid a late payment therefore, it is highly recommended to set up auto pay.

Know your Rights (5 Tips to Increasing Your Credit Score)

To avoid being unduly harassed by creditors, learn your rights fast. Some collection agencies have been known to lie or engage in illegal techniques in order to get paid. Read up on the collection agency laws in your area as well as the Fair Debt Collection Practices Act. A little knowledge will give you the ammunition you need to shut down harassment. Also, check the laws in your state and verify their statutes of limitations. Most often a debt can be removed from your credit report if the debt has been inactive for over 7 years. Removing negative accounts from your credit file will increase your credit score.

Manage Utilization (#1 Tip to Raising Your Credit Score Fast)

Want to know how to raise your credit score to 700 or above? Then you have to understand utilization. Utilization is the second largest aspect on your credit report. This is how much debt you are carrying on your credit card compare to the limit of that card.  The lower the percentage, the better your score will be. In other words – you have got to master paying your credit card balance in full each month.  If you are not discipline to do that then you have got to stop using your credit cards for purchases and only make purchases when you have the money to pay for the item. It is that simple.

If you are not able to pay your full balance each month then the next best thing to do is to aim for a utilization of no more than 30% of the card’s total limit.  The fastest way to raise your credit score is to pay down on your debt.  This indicates to the credit bureaus that you are not using credit to pay your bills. Therefore, a little restraint will go a long way to show that you use your credit responsibly.

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Key Takeaway (5 Tips to Increasing Your Credit Score)

At the end of the day, getting out of a bad credit situation is all about arming yourself with the proper information to do so. Anyone can improve their credit score in no time at all. Here’s how:

Action Steps: (How to Raise Your Credit Score to 700)

1. Check your credit report to ensure there are no discrepancies, including unnecessary inquiries.
2. If there are discrepancies, resolve these as quickly as possible since it will take some time before your credit file gets updated. The longer you delay, the longer your score will take to increase.
3. The number one issue that affects your credit score is payment history. While missing an electric or cell phone payment will not hurt your credit, this is not the same as missing a credit card payment. Keep this in mind if your are struggling with paying bills and prioritize accordingly.
4. Know your rights so you can have peace of mind while paying bills yet still taking care of day-to-day living.
5. Finally, utilization is the second largest aspect on your credit report. This is how much debt you are carrying on your credit card compare to the limit of that card.  Aim to keep this under 30%. Ideally you want to get to the place where you carry no credit card debt at all. The lower the percentage the better your score will be.

The internet is riddled with misinformation and half-truths so heed this information wisely and use it to pull yourself up by the bootstraps so you can experience a life free from bad credit. If you remain consistent in handling your debt responsibly, soon you will improve your credit score in no time at all.

Share with us: what other tips do you use to raise your credit score?

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Cheers!