Your credit score refers to the three-digit number that the lenders use to help them decide the likelihood of you paying on time if they grant you the loan. Indeed, it is an essential factor in your financial life. If you have higher scores, you will more likely qualify for credit cards and loans with the most favourable terms. This can help you save money in the end. 

If you have a credit score far from where you want it to be, then you are not alone. Indeed, improving your credit score takes time. However, the sooner you address the issues, the faster that it will go up. When you try the several steps included in this article, you can increase your credit scores. Check the tips below now: 

Don’t Close Unused Credit Cards 

If you have unused credit cards, keep it open. If you close your account, it may increase your credit utilization ratio. When you owe the same amount but have fewer open accounts, it may lower your credit scores. 

Pay off your Debt, Keep Balances Low on Revolving Credit 

One important number in credit score calculations refers to the credit utilization ratio. This is determined whenever you add all your credit card balances at any time. Then, you divide that amount by your total credit limit. For example, if you charge $2,000 for every month and your total credit limit on your cards is $10,000, then your utilization ratio is 20%. 

To determine your average credit utilization ratio, read all your credit card statements from the past 12 months. For every month, you can add the statement balances on all your cards and then divide it by 12. That is how much credit you can utilize on average for every month. 

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Lending companies with credit cards to build credit will like to see low ratios of 30% or less. Clients with the best credit scores have very low credit utilization ratios. 

Pay Bills on Time 

Whenever lenders request your credit score and review your credit report, they are interested in how reliable you are in paying your bills. This is because past payment performance is one good predictor of future performance. 

You can influence your credit scoring whenever you pay your bills on time each month. Whenever you pay late or settle your account for less than what you have originally agreed can negatively affect your credit scores. 

Pay your bills on time. Lending companies with credit cards to build credit refers to all bills and not just your credit card bills or loans. Examples are student loans, auto loans, utilities, rent, phone bills, and others. 

Moreover, it is a good idea to use the tools and resources available to you. Examples are the automatic payments and calendar reminders to help you ensure that you get to pay your bills every month. 

If you are behind on any payments, make sure that you bring them current as soon as possible. The missed or late payments can appear as negative information on your credit card report for seven years. However, their impact on your credit score will decline over time. Remember that the older payments have less effect versus the recent ones. 

Open New Accounts as Needed 

Do not just open accounts to have a better mix. Unnecessary credit cards can harm your credit score in various ways. It can create too many hard inquiries on your credit report and tempt you to overspend and have more debts. 

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