If you’ve ever leased an apartment, purchased a car, or applied for a loan, you’ve heard of a credit score. It’s a numerical score that tells lenders how financially dependable you are and how well you pay off your debts.
You would be eligible to qualify for a bigger loan at a better interest rate if you have a better credit score. If you want to improve your credit score, here are some suggestions you may not know about.
Stop Paying with Cash
Using cash can help you with your budget, but it does little to improve your credit score. When you pay with cash, the purchase is “off the record” and has no effect on your credit score.
To better improve your credit score, charge these payments that you already account for on a credit card and pay the whole bill every month. This will demonstrate to the financial institution that you are able to afford your bills and that you are making good use of the credit that has been extended to you.
Be on Top of Your Bills
Paying the bills on time is also important to your credit score. It accounts for 35% of your FICO score, so skipping even one payment can have tragic consequences. This demonstrates to financial institutions that you can use credit responsibly and are committed to paying off your debt.
Paying off your bills can be a breeze if you just use your credit on transactions you already make. It is important that you pay your bills on time.
Increase Your Credit Limit
Many credit card providers will gladly raise your credit limit if you follow the two measures above on a regular basis. You may also inquire directly if they don’t do it immediately. A credit limit increase will improve the credit score.
The important point here is that you must maintain your expenses in order to adjust your debt to utilization ratio. The percentage is the amount you pay in relation to the overall amount you could spend if all of your credit cards were maxed out. Any rise in your credit limit will reduce your ratio, and a debt rate less than 30% will give you a good credit score boost.
If you have any questions about your credit score or how you can increase it, visit SavvyMoney on your online banking profile or give us a call at 303-458-6660.