Credit scores are a sensitive topic for many people. According to a survey by the National Foundation for Credit Counseling, more people would be more embarrassed to admit their credit scores than their weight (30 percent vs. 12 percent).
Having a healthy credit score is necessary if you want to apply for loans or apartments, but clearly, many people don’t feel comfortable with their score. It’s important to have a good score to qualify for financial opportunities as well as get the best terms.
If your credit score needs a boost, don’t despair. Here are six practical steps you can take to increase it.
6 Practical Steps to Improve Your Credit Score
1. Fix errors
According to Curtis Arnold, a contributor with Forbes, the first step to improving your score is to dispute errors on your credit report. These errors could be late payments that you paid on time or accounts that aren’t yours. It could also be a debt that is shown as “outstanding” when you’ve paid it off.
Make sure to scan your report for old debts that shouldn’t be in the report. As Pat Curry, a Bankrate contributor, explains, “Negatives are supposed to be deleted after seven years, except for bankruptcies, which can stay for as long as ten years.”
2. Pay down your credit card balances
Next, work on paying off your balances on the credit cards you own. Start with the cards with the highest utilization, says Bev O’Shea, contributor with Nerdwallet. Strive to pay more than the minimum so you can pay the debt off faster and reduce the amount of interest you owe.
It can take just two months of paying down your credit balances to boost your credit score enough to attain the next tier of loan pricing, according to Curry.
3. Under-use your credit cards
It’s also wise to use the credit cards you do have sparingly. How often you use your credit card and the portion of your credit line that you’re using both have an impact on your credit score.
Credit bureaus calculate your credit score based mostly on your “credit utilization ratio” (the percentage of your available line of credit you’re using). Aim for a credit utilization ratio of 20 percent or less, as Elyssa Kirkham, a contributor to Student Loan Hero, recommends.
4. Increase your credit limit
Another practical step is to raise your credit limit. “The higher [your credit limit] is, the lower any balance you carry will be in comparison,” Kirkham says.
Be cautious about increasing your credit limit, though. It only works if you are disciplined enough to refrain from maxing out this more expansive line of credit that you’ve initiated.
A smarter strategy may be to wait for a credit limit increase to occur naturally. To earn one, keep your payments on time and be a responsible card user.
5. Resolve past-due bills
Per O’Shea, payment history is one of the most significant factors that impact your credit score. If you have any past-due bills, it’s important to resolve them. Call the creditor, pay the amount you owe them and then ask them to rescind any reported delinquencies so they’re eliminated from your credit reports.
6. Set up auto-pay
Make use of resources like automated payments to help ensure you consistently pay bills on time. This feature is especially useful if you have multiple payments you’re in charge of, such as utilities, school loans, car payments, child care and mortgage payments.
Monitor Your Credit Score With Minster Bank
Checking your credit score regularly can help you gauge your progress as you work to improve your score. You can do this anytime, anywhere with Credit Sense, a tool that can help you stay on top of your credit by providing your latest credit score and report. Available to all Minster Bank customers through the mobile app and online banking, it’s free to use and will NOT impact your credit score. Click below to learn more.
This blog was originally published by Minster Bank in May 2018 and updated in January 2023.
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