Quick Tips To Improve Your Credit Score

Your credit score determines a lot. It’s one of the most important factors of your financial health. The better your score is, the easier it will be to open new lines of credit at favorable rates.

This can sound overwhelming if your credit score isn’t in good shape right now. But don’t worry—there are steps you can take for improving your credit score, and we’re taking a look at them below.

Strategies for Improving Your Credit Score

There are quite a few strategies you can get started with in a matter of hours, but it’s important to remember that it can take a few months to start seeing an impact on your credit score.

Set Up Automatic Payments

Your payment history has the largest impact on your credit score. It accounts for 35 percent of your credit score, so you want to make sure you’re paying bills on time and not missing any payments.

Payment history accounts for so much of your credit score because it points to your track record of repaying your debts.

Pay Down Your Balances

The amount of your revolving debt also has a large impact on your credit score. Your credit utilization should be around 30 percent or less. This number points to the amount of credit you’ve used compared to your credit limit.

Paying down your debts will help show lenders that you’re responsible with credit. To improve your utilization quickly, you may be able to ask for a credit limit increase for your credit cards. However, it’s important to make sure your balance doesn’t also rise in tandem with the increase in credit limit.

Limit Requests for New Credit

There are two types of inquiries into your credit history: hard inquiries and soft inquiries. Soft inquiries can include checking your own credit history, getting pre-approved for credit and giving a potential new employer permission to perform a credit check. These types of inquiries don’t impact your credit score.

Hard inquiries do impact your credit score. These inquiries can include applications for new lines of credit, such as a credit card, personal loan, auto loan or mortgage. An occasional hard inquiry won’t hurt your credit score too much. However, many hard inquiries within a short period of time may hurt your credit score and could indicate to lenders that you’re facing financial difficulties.

Consider a Credit-Builder Loan

If you’re starting your credit history from scratch or recovering from a hit to your credit score, a credit-builder loan may be a good option. With a credit-builder loan, a lender will set aside a certain amount of money in a savings account. You’ll then pay monthly installments to the lender over 6-24 months. While you make your payments, the lender will report your on-time payments to the credit bureaus, which will help build your credit score. At the end of this period, you’ll receive the full lump sum that was set aside in the savings account.

Regularly Check Your Credit Reports

Periodically check on your credit reports to ensure everything is accurate. If you see something that doesn’t seem right, dispute it with the credit reporting agencies to initiate an investigation. Regularly checking on your credit reports ensures you’re keeping up on potentially fraudulent transactions, and it can also help you keep track of your progress toward improving your credit score.

Become an Authorized User

Another quick way of improving your credit score is to become an authorized user on a trusted family member’s credit account. You’ll be able to use the card as though it was your own to make purchases, but you’ll still need to work out a way to repay the cardholder for the purchases you make. It’s important for both parties to be responsible with this kind of setup because the account will impact your credit score as well as the cardholder’s score.

Take the Next Step Toward Financial Wellness

Your bank or credit union can provide plenty of resources to help you get on the path to financial wellness. Explore what 7 17 Credit Union has to offer by becoming a member today.