If you are looking to improve your credit score before you purchase a new car, apply for a home loan or make any other big purchase, then it’s a good idea to explore some tips for improving credit score. With the help of IntentGen, we’ll cover how to check credit score and how to improve credit score before your next big purchase.
8 Tips for Improving Credit Score
Review Your Credit Reports
The first step to understanding and thus improving your credit score is understanding why you have the number you do. There are three major credit bureaus you can use for free once a year to review your scores: Equifax, Experian, and TransUnion. A number of factors can help or hurt your score including:
- History of on-time payments or Late Payments
- Low balances on your credit cards or high card balances
- Mix of different credit card and loan accounts
- Older credit accounts or Accounts in Collections
- Minimal inquiries for new credit cards
Paying Your Bills
There are five factors that are taken into account when creating a credit score, but the largest is payment history. The easiest way to improve your credit score is to pay your bills on time. You can also use your credit card to pay your bills (assuming you will pay the balance in full each month).
Aim for 30% or Less of Credit Utilization
This is the second most important factor in calculating credit scores. Paying your bill in full each month or remaining below 30% utilization is a good idea for Chicago-area residents.
Limit Requests for New Credit
There are soft or hard inquiries that can impact your credit score differently. Soft inquiries are if you check your own credit score, an employer checks your credit score, or your credit card company. These won’t impact your score. Hard inquiries, on the other hand, include applications for a new credit card, a mortgage, an auto loan, or any other form of credit. If these occur infrequently, then you shouldn’t have an issue with your credit score, but the more frequently they occur, the larger the impact on your credit score.
Optimize Your Credit Files
It’s very common for Illinois residents to not have enough credit history to actually generate a credit score. Different applications can be used to collect financial data that typically isn’t used on credit reports, including banking history and utility payments. It can be used and designed for people with limited or no credit who have a positive history of paying their other bills on time.
Keep Old Accounts Open & Handle Delinquencies
Another factor is the age of your accounts. Keeping old accounts open, even if you aren’t using them, it’s beneficial to your score. Be sure to pay off delinquent accounts with late payments as soon as possible.
Consolidate Your Debts
A bank or credit union can help you consolidate your debt so that you’re making one payment on all of your debts. You may also be able to achieve lower interest rates.
Use Credit Monitoring
Credit score monitoring is available through various services to help Arilington Heights shoppers keep track of changes to their credit score.