A good credit score makes your life easier in many ways. You’ll have no trouble opening bank accounts or setting up an account with a new utility company if your rating is strong. You’re more likely to be approved for loans and credit cards, and you’ll be offered those loans at better rates. With a good score, lenders are also more likely to negotiate with you on repayment terms and give you what you ask for. Getting car insurance, a cell phone contract and renting an apartment are all easier with a solid score. If your score is not as high as it could be, there are things you can do to improve it starting now.
Review Your Credit Report
The first step in improving your score is to not only find out the value, but what information the various credit reporting agencies have about you. You are entitled to a free annual report from each of the three main agencies, Experian, Equifax and TransUnion. Review the information on each report carefully. If you see any information that is inaccurate, you should try to get it corrected. If you are unable to do so, you can at least dispute.
Manage Your Debts
If you are struggling with your debts and missing payments, this is going to have a negative effect on your score. While it’s best to pay off your debts as soon as possible, you also need for your payments to be manageable. If you have student loans, you may be able to cut your monthly payments by refinancing them. This could mean that your repayment period is longer, but it also may give you the breathing room you need to get on top of your debts and pay them on time. If your rating means you are having trouble getting a refinance, getting someone to cosign on it may help.
Apply for a Credit Card
You might think that the best way to improve your credit is to avoid using a card, but it’s important to show that you can manage credit responsibly. Therefore, you should apply for a card if you don’t have one and try to use it regularly. If your credit is poor enough that you can’t get a regular card, you can start with a secured one. This involves putting down a few hundred dollars, and this will be your limit. Pay off the card each month, and your score will gradually improve. However, you should keep your utilization rate low. This rate is the percentage of the total available credit. A good rule of thumb is to stay under 10%. If you have a secured card, you will eventually be able to apply for a regular one.
An Ongoing Effort
If you are responsible with your utility payments and your banking, you can opt into programs that use this information in determining your score. This can be helpful for people who have what is known as a thin record, meaning there is little information on at all.