Your credit rating is extremely important. Without a good credit score, you’ll be unable to get a loan for a new car or a home--unless you’re willing to pay outrageous interest rates. Because the interest rate you pay on a loan is directly related to your credit score, it’s a good idea to keep the score as high as possible. If your credit rating is lower than you’d like it to be, you may be interested in the following tips on how to boost your credit score.
Make Payments On Time
Keep in mind that the best methods of improving your credit score don’t happen overnight. They take time. If you’re looking for a quick fix to your credit woes, you may be disappointed. There are very few ways to improve your credit score in a hurry. It takes patience. The most reliable method of increasing your credit rating is to pay your bills on time. If you’re consistently late in making payments, your credit score will suffer--and your interest rates may go up. One way to improve your credit rating is to pay your bills before or on the due date. If you’re able to do this on a regular basis, your lender will report it to the credit bureaus and your score will improve--but it will take time.
Get a Loan
Borrowing money simply to improve your score is a legitimate method of raising your credit rating. The idea is to secure a loan, but don’t use the money. Instead you should open a savings account and leave the money alone. Use that money to pay off the loan. Of course, it will cost you a little bit in interest to carry the loan, but your credit score will improve if you make the payments on time.
Use Credit Cards Wisely
Most people think that they shouldn’t use their credit cards if they have bad credit. Nothing could be further from the truth. You shouldn’t stop using your cards, simply use them wisely. If you don’t use a credit card, your credit score can’t go up because the agency that issued the card won’t have anything to report--your score could actually go down. However, if you use the card and pay off the balance, or most of it, at the end of each month, your credit score should improve. In fact, it would be a good idea to let a little of the debt carry over, but not so much that you’ll have to pay a lot of interest. The reason for doing so is because your credit rating is calculated on the percentage of available credit that you use.
Ask for a Credit Increase
Because your credit score is determined, in part, based on the difference between your credit limit and the amount of debt you actually carry, increasing your credit limit, but not borrowing anymore money, will actually increase your credit score. Contact your credit card company and ask for a credit limit increase. If you’ve been paying on your credit cards regularly, a lender such as Visa or MasterCard will most likely grant you a credit limit increase.
Cut Back on Credit Card Usage
By decreasing your debt, you can create a huge margin between what you owe and your credit limit. In this way you can actually increase your credit score. If you use your credit card less, the difference between what you’ve borrowed and your credit limit will continue to be noticed by the credit bureaus, and your credit score will go up. Don’t discontinue using the cards altogether, simply cut back on their use.
Check for Errors on Credit Reports
Errors do happen on a credit report. You should make it a point to check your credit report often. If you come upon something that you feel is inaccurate, you have the right to dispute it. Contact the credit bureau and let them know about the error. Be prepared to back up your claim with any relevant documents. The credit bureau will investigate the claim by contacting the lender. They have the right to either confirm or deny the claim. If after a thorough investigation the claim is upheld, your credit score will improve.
Guest post from Taylor Harris. Taylor writes about the best online colleges for BestOnlineColleges.com.
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