Your credit score may be lower than you want it to be. Thankfully, there are quick steps you can take to bring it up. Depending on what is negatively impacting your credit, you may be able to bring it up by as many as 100 points quickly.
Use Credit Cards to Build Credit
Credit cards, when used appropriately, can help build credit. But does it hurt your credit to apply for credit cards? Maybe. According to the experts at SoFi, “One credit card application can ding your score by just a few points, but multiple applications can raise red flags for lenders and drag down your credit score accordingly.”
Credit cards are your trump to build credit. Card issuers usually report your credit card usage to the major credit bureaus, which are Experian, TransUnion, and Equifax. This information is then used to create a credit report that produces your credit score.
If you have poor credit or have not had a credit card before, it can be hard to get one. However, student credit cards and secured credit cards may be an option. You either need to open a credit card yourself or be the authorized user on another person’s credit card to start building credit.
You can also ask someone (a friend or family member) to include you as an authorized user. Only do this if the person is known to manage their credit cards well.
Pay Your Bill on Time
One of the most remarkable factors in your credit score is paying your bill on time. You don’t have to pay off the whole card each month. But you should pay the minimum payment each month on time. If you don’t do this, not only will it affect your credit, but you might lose any promotional interest rates on your account.
A simple way to ensure you don’t miss a payment is to use auto-pay on your account. You will know that the minimum payment is being made every single month. You can pay the remaining balance or as much of it as you can at your leisure.
Keep Your Utilization Rates Low
Credit score models look at your balance and credit limit to calculate your credit utilization ratio. The lesser your utilization ratio, the better it is for your credit. If you want the best credit scores, it is recommended that you aim to keep your utilization below 10 percent. At maximum, you only want to use 30 percent of your credit card limit.
Monitor and Build Your Credit
Leveraging a credit card to build your credit is just one way to maintain your creditworthiness. You need to monitor your progress in building credit by looking at your credit report and credit score online periodically. Also, monitor for any alerts. If there is suspicious activity, credit cards that you do not open, or a credit request you didn’t authorize, you need to take immediate action. Pay attention to how your score changes over time and make adjustments to continue to improve your credit.