Having good credit is not only good for you, but it can save you money, too. With good credit, you are typically offered lower interest rates and will be more eligible for loans and other forms of credit. Your credit score takes several factors into account, including the amount of installment debt you have, revolving debt, and tradeline debt. A few tips for credit score improvement include making sure you pay your bills on time and diversifying your financial profile.
- Paying bills on time can hurt your credit score
Obviously, paying bills on time is the best thing you can do for your credit score and your financial health. But sometimes it’s difficult to pay bills on time. Whether you’re struggling with a financial crisis or simply can’t seem to make ends meet, a single late payment can hurt your credit score significantly. Your payment history is the key to determining your credit score because it tells lenders whether you’re a good risk and can help them determine if you’re a credit-worthy candidate. And your payment history is a key part of your credit score – it makes up 35 percent of your overall score.
- Diversifying your financial profile can improve your credit score
Maintaining a healthy balance between your available credit and total debt can boost your credit score. The best way to diversify your financial profile is to avoid closing your paid-off credit card accounts, which can negatively impact your debt-to-credit ratio. This is because you may be underutilizing your credit, and it may not be a good idea to have too many open new accounts. In addition, you should avoid several hard inquiries on your credit report.
- Closing old accounts can lower your credit score
You might be wondering whether closing an old bank account can hurt your credit score. After all, bank accounts don’t need to be there forever. There may be many good reasons to close an account, including relocation and dissatisfaction with customer service. If so, you should know the consequences of this decision.
- Avoiding store credit cards
If you often shop at your favorite stores, American express gold benefits are a great way to increase your credit score. While they offer attractive introductory offers, store credit cards often come with high-interest rates. While they can help you get great deals and build credit, they can also increase the amount of money you spend each month on purchases. Think about your spending habits and how useful a card maybe before you apply. If you don’t pay the balance in full each month, you’ll end up paying more in the long run.
- Using multiple credit cards
Using multiple credit cards is a great way to improve your credit score. You can enjoy the added spending limit and lifestyle of having several different cards. However, you should understand how to effectively manage each one. If you have many credit cards and do not know how to manage them, you may end up accumulating debt faster than you should. In addition, many banks check your credit history before giving you a loan or extending your credit.
- Making timely payments
If you have several bills coming up at once, you’ve probably wondered about making timely payments for your credit score. Making timely payments on all of them is essential for maintaining good credit. Your credit score is based on five factors, including your payment history, which makes up nearly 35 percent of your overall score. Even one late payment can negatively affect your overall credit score. Luckily, there are a few simple steps you can take to ensure your payments are reported on time.
- Avoiding collection accounts
You can avoid collections by contacting your creditors and the credit bureau to try to settle the account. If you are having trouble making payments, the credit bureaus may agree to settle your account if you can prove that you have a good payment history. This will boost your credit score.
