Whether you have filled out a mortgage application, for an auto lease, applied for a credit card, or even looked-for insurance rates, you’ll notice that credit score is primarily what decides your acceptance or decline fate, with the lender seeing if you are worthy of borrowing. Income is important to show that you have the necessary funds to support the monthly payment, but credit score gives a whole picture of how you are as a borrower in regards to your payment history, amount of debt, and how often you inquire on taking out additional monthly expenses. In order to take advantage of the best interest rates on the market to keep a little extra in your pocket, you’ll want to have the best credit score out there, so just about everyone could get help for a little boost.
Review Your Credit Report
With the amount of fraudulent activity going on these days from getting your credit card info taken while you are filling up at the pump, to even large stores that are having their data breached, you never know when you could be a victim and not even know it. My card was compromised a year ago and was tried for a little charge, but fortunately I caught it. Others are not so lucky, leaving the victim to sort it out and hope to get the money back later if used with a debit card (one reason to always use a credit card for purchases). By reviewing your credit report at least once a year, you could get a boost just by correcting any misinformation on your report.
Never Miss a Payment
One factor in your credit score that is extremely important is your payment history. The better you are at making your payment on time will be rewarded with a better credit score. Now, being late with a payment may cause you to get a late fee or even worse, a hike in your interest rate, but it will not show up on your credit report until you are thirty days late. This will want to be completely avoided because if you do have a negative mark for your payment history it can stay on your credit report for up to seven years, so that is plenty long to haunt you for a mistake, so be careful.
Free Up Your Credit Availability
Another large portion of your credit score is based upon the differential between the debt that you have charged versus what you have available, so say you have close to your credit limit used up, your score could be significantly lower than someone who keeps getting their credit line increase but yet doesn’t continue to charge up the card. Staying out of debt is not only important for your long-term financial future, not paying interest when you could be putting that money towards better use like saving for retirement, but increase debt also lowers your credit score so that could be hurting you getting a great rate on a loan, at which you would be paying even more interest.
Leave Accounts Open
Paying off a credit card is a huge accomplishment, especially if the balance was high and have taken years to finally get rid of that debt, it is a great feeling for sure. You may be so excited to have that balance gone that you close out the account so you never get into that situation again. While yes, it is important not to get yourself into that debt again, but actually closing the account can hurt your credit score by removing that available credit, so you will want to leave long term accounts open to help your credit score. If you don’t want to use the card anymore, just cut it up and leave it open.
Keep Applications to a Minimum
When you fill out a credit application, your report is pulled for the lender to view, but it also ticks down your score a little for the inquiry, so it’s important to make sure that if you are filling out an application, it is a need and you plan on going through with it. Otherwise, by submitting too many applications it will lower your score and could give the wrong impression to lenders that you are obtaining too much debt at once. These inquiries stay on your credit report for two years, so limiting yourself on applications will help your score, and as they fall off your credit report you should be seeing a spike in your score.