5 Ways To Boost Your Credit Score

Once you reach the point where you make your own financial decisions, maintaining a good credit score is essential. An excellent credit score helps you get several financial perks, such as better payment terms and lower interest rates on your purchases.

Various institutions also look at your credit score to determine whether you qualify for loans on multiple necessities, such as your car or your dream home.

Improving your credit score isn’t something you can do overnight. It results from a series of actions that help assure financial institutions of your stability and capability to make sound financial decisions.

If you’ve just received your credit report and believe your score needs a bit of a boost, we’ve got five tips to help you.

1. Keep Up With Your Payments

One of the easiest and most effective ways to keep your credit score up is to pay your bills on time. Your payment history is a very significant part of your credit score.

If you can’t pay the entire bill, settle at least the minimum amount, and never skip a payment. If you think you might be unable to pay, make sure to contact your lender as soon as possible.

2. Watch Your Credit Limits

As much as possible, never go over your credit limit. Doing this will negatively impact your credit score.

Use your available credit limit, but try not to spend too much of it. Being a consistently high borrower could result in lenders seeing you as a greater risk. 

A good rule of thumb is to spend only around 35 percent of your available credit.

3. Use Different Types of Credit

It’s good to have multiple lines of credit to help increase your credit score. These could include one or more credit cards, a car loan, or applying for a personal loan online.

Make sure you pay your bills for these different lines of credit on time. If not, it could hurt your score.

4. Lengthen Your Credit History

This method will take a bit of time, as it involves maintaining your lines of credit across a more extended period, which could take a few to several years.

Think of this as a more passive way to boost your credit score. Establishing a long credit history helps tell lenders you are a stable and consistent borrower. 

Even as you apply for newer lines of credit, try to keep one or a few of your older ones to ensure that your credit history isn’t broken.

5. Limit Your Credit Applications and Credit Checks

While it is good to maintain multiple lines of credit, try not to apply for too many new ones in a short time. 

This also applies to credit checks when you might be shopping for car loans or mortgages. In these instances, lenders and agents would often ask credit bureaus for your credit report to discern whether you’d make a suitable candidate.

This practice could look irresponsible to lenders, making them think you are trying to live beyond your means or urgently seeking additional credit.

Boosting your credit score is rarely an overnight endeavour. However, paying attention to your financial decisions and consciously trying to improve your credit over time will pay off and help improve your quality of life.