We all know that your credit score is essential to your financial life. It’s how you qualify for the best credit cards, loans, and financing offers.
That’s why it’s not only important to build a strong credit history, but also to know how to keep your score high. Otherwise, you might run into trouble getting approved by major banks. For those facing credit issues or needing to boost their score quickly, here are some practical tips that can really help:
1. Pay Your Bills on Time
The main tip couldn’t be anything else: keep your bills up to date. Avoiding late payments is a fundamental part of your credit score. In the FICO Score, the most used by American banks, it represents 35% of the entire score.
In other words, people who pay their bills on time, before the due date, increase their score and profile approval more. To help with this mission, activate due date alerts and, if possible, use automatic payment so you don’t miss any dates.
And, of course, if you have outstanding debts or debts in collection, negotiate with the agencies. One tip is to use the pay for delete agreement, which removes the debt from the report after payment. This improves your profile and your name is not negatively affected when applying for new credit. If you notice that your name is still listed as a debt on the reports, dispute errors and negotiate to remove it.
2. Don’t Use Up Your Credit Limit
Of course, having a credit card is very useful, but to increase your credit score, try not to use up your entire limit at once. This way, banks and the FICO score understand that you have financial responsibility.
Initially, use less than 30% of what is available; if possible, stay below 10% to increase your score. Eventually, ask for an increase, but only after a few months of good history, showing that you pay your bills on time and need more credit, as you know how to handle credit.
To help, combine different revolving and installment credits, such as cards and financing, to diversify payment sources and help your credit score.
3. Don’t close old cards
If you’ve gotten a better interest rate offer, the most obvious way to do this seems to be to close the old account or card, but don’t do it! After all, a positive history in the past shows that you are a reliable customer. In addition, the average age of credit impacts up to 15% of the FICO score.
In other words, having the same credit for a long time shows stability, in addition to financial responsibility. Therefore, just make sure that the old card will not be charging, but, if possible, keep it open, so that it appears on the reports.
And when applying for a new card, avoid doing so in very short periods of time. Each application generates a “hard inquiry”, which temporarily reduces your score. After all, you are looking for more credit. Always opt for recommendations, or soft inquiries, which are already pre-approved.
4. Use a credit builder loan or secured credit card
If you are starting out and need to build a good credit score to get approvals without a history, look for products such as a credit builder loan or a secured credit card.
These lines are designed specifically for beginners who do not have a reliable analysis base. In addition to helping you build a more promising profile, they are also sources of credit to help you when you need to make purchases. In just a few weeks, you will build a better score.
Bonus Tip
Be an authorized user on a card with a good history. Ask family or friends to put you on an old card as a co-holder. This way, you inherit the positive history of that card, which helps in profile analyses.
A few simple tips can help you improve your credit score in a few weeks, reaching more proposals and approvals.
All information in this and other BOISLA articles is subject to change over time. Please check for updates directly with the institutions and companies mentioned. Approval is subject to the institution’s review.
REFERENCES:
