5 Easy Ways to Improve Your Credit Score

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Raising your credit score can be one of the best investments in your financial life. You credit score determines if you are eligible for a mortgage, student loan, credit card or auto loan. Your credit rating may also be used when you are renting an apartment, applying for insurance or even buying a mobile phone. To increase your approval chances as well as get the lowest rates, the following are some of the ways you can apply to raise you credit score:

Check the accuracy of your credit report

It is important that you get your credit report, go through it carefully and check for any mistakes if any. According to a report by the Federal Trade Commission, 5% had mistakes on their credit report. A credit report is developed by credit bureau from information collected from your credit history. Lenders then use this report your credit worthiness. Under the federal law, one is required to go through his or her credit report in every one year from more than one credit bureau. It is possible to get varying reports from different bureaus since they have varying information about your credit history.

In the event that you get an error, you should lodge a complaint immediately so that it is rectified. Your credit rating may not go up immediately but it is advisable to take action as soon as possible.

Build a financial track record

If have already developed a credit history and wish to raise the credit rating, you need to show that you are responsible financially. To achieve this, you need to have good financial track record. For instance, credit card companies closely monitor your account age and payment history. Those who have credit cards can develop good financial reputation by making purchases then paying in full within a month. It pays off if you maintain your credit card in good financial standing. Consistent timely payment history as well as accounts with long life-span show financial responsibility and discipline.

Avoid opening or terminating several credit cards at once

Opening several credit cards at the same time may raise numerous hard inquiries in your credit report. This in turn may lead to a drop in your credit score. Additionally, this will also paint you as a risky borrower in the eyes of credit card companies. Closing several credit cards at once may also raise questions about your financial behavior. It is even advisable to maintain an older credit card if it does not attract annual fee. This will help you showcase a long credit history.

Minimize your credit card utilization

Lenders always evaluate the way you utilize your credit card as well as the relationship between your monthly spending and credit limit. You are considered a high risk by lenders if your credit utilization is very high. It is advisable to maintain your credit utilization below 30%. If your credit card has a credit limit of $10,000 for instance, it is advisable that you spend $3,000 in a month. To manage utilization of your credit card, consider:

1. Activate balance alerts
2. Request a rise in your credit limit
3. Make periodical payments instead of paying in lump sum at the end of the month.

At the end of every month, your credit utilization is always reported to credit bureaus. This means any steps you make to reduce on your balance before the closing date will significantly help in raising your credit score.

Clear your bills in time

Paying of your bills in good time significantly helps to improve your credit score. Whether it is student loan, rent or utility bill, you should always strive to clear them in good time. Delaying to pay bills hugely hurts your credit score. To avoid missing payment or delaying in clearing bills it is advisable to subscribe to automatic payment system. You stand to enjoy financial incentives provided by some service providers if you subscribe to auto pay.

Raising your credit score is comparable to losing weight. It is a gradual process. Unless your credit report has big mistakes that you can easily erase, there is no quick solution. In most cases, it takes a number of years to move from low to high score.

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Kevin Schultz is a professional journalist with over 15 years of writing and media experience. He is a full-time contributor to the Themocracy Online News Blog and his insightful writing has been enjoyed by thousands.