David Bakke is a finance writer for Money Crashers, an online platform committed to helping its audience understand crucial financial matters such as budgeting, frugality, retirement savings, investing, and maximizing life’s potential.
A vital part of a robust financial base is a good and healthy credit score. Several aspects of your monetary life, such as insurance premiums and loan rates, are influenced by your credit score. It can also affect your chances of securing employment or acquiring a place to live.
The better your credit score, the more advantageous your financial standing, so follow these guidelines to bolster your score:
Five Strategies to Augment Your Credit Score
1. Be Consistent and Prompt with Bill Payments
One of the quickest ways to decline your credit score is to delay payments. On the contrary, paying promptly and in full monthly is an effective method to increase your score. Even one tardy payment can severely impact your credit score.
Payment of utilities like water, electricity, cable TV, and internet services should be regular. If possible, clear your credit card balances in entirety.
If you can’t pay in full, at least ensure timely minimum payments. Even during financial hardships, prioritize avoiding late payments and seek to settle all outstanding bills as soon as possible.
2. Initiate New Credit Lines
Your credit score is significantly impacted by the used percentage of your total available credit. Thus, initiating new credit lines can enhance your score. But avoid opening numerous credit lines within a short span. It’s best to stagger new account creation as do it all at once can backfire.
3. Active Credit Card Use
Many people open new credit lines intending to use their cards sparingly or not at all.
Be aware that credit card companies might restrict your credit limits or even close your account if they observe prolonged periods of neglect. So, don’t let your opened credit lines become idle. Periodically make minor purchases and pay them off in full to keep the credit accounts active.
Credit score agencies favor credit card usage combined with full monthly payments, boosting your credit history and elevating your credit score. Take care, however, not to overspend and violate the first rule.
4. Retain Old Credit Lines
Unbeknownst to many, closing a credit card account can mar your credit score. If you have open and active old cards, don’t close them unless completely necessary due to high annual fees. Instead, appreciate the benefits of available credit and make minimal purchases to keep the cards active and their balances at zero. Your score will subsequently improve.
5. Regularly Review Your Credit Report
In addition to maintaining desirable credit activities to optimize your credit score, consistent monitoring is vital. Upon my first credit score check, I found several errors that were adversely affecting my rating. I managed to rectify most of these discrepancies, but if unchecked, my score would have remained undeservingly low.
Despite what some scammers may claim, viewing your credit report should never cost you anything. You have the right to access your credit report once a year from each of the three credit reporting agencies via the official website AnnualCreditReport.com.
