4 Easy Ways to Improve Your Credit Score | Davis Thorpe & Associates

4 Easy Ways to Improve Your Credit Score

Whether you want to buy a house or recover from a bad credit history, a good credit score is a reflection of your financial health. There is a lot of advice out there about how to improve your credit score, but one of the simplest ways lies in paying your bills on time and use your credit cards sparingly. If you want to go further to repair and optimize your credit score, here are a few easy ways to improve your credit score:

1. Reduce your credit utilization ratio.

The credit utilization ratio is the difference between how much credit you’ve used and how much credit you have left and has a huge impact on your overall credit score. So, if you have a card that is to the maximum every month and it’s the highest balance you carry, pay that card down as much as you can to reduce the debt. That reduces your ratio and improves your score.

You can also reduce your utilization ratio if you request for a credit limit increase on your cards. However, if you have a habit of maxing out your cards every month, avoid increasing limits to prevent overspending. Instead, work towards bringing your debt down and utilize credit cards sparingly.

2. Review your credit report.

Make sure you request your free credit report every year, which includes information from each of the threee reporting agencies, Experian, TransUnion, and Equifax. Also, requesting one will not have an impact on your credit score, either. When you receive your report, look for any errors and dispute them. Removing false information will improve your score. Some of the most common errors include a misspelled name or address, or accounts from someone else that has the same name as you. Others include accounts that have incorrectly reported late payments, debts listed more than once, and closed accounts that are still open.

3. Pay your bills on time.

It’s worthy of repeating – pay your bills on time. Most importantly, if you find that you are unable to pay your bills at the moment, contact your creditor immediately. Due to the pandemic, many creditors are willing to work with their customers, so your credit card company may have some options for you. The last thing you want to do is to wait too long.

4. Avoid getting new credit cards.

Although opening a new card can increase your overall credit limit, applying for a card adds a hard inquiry on your credit report. Too many of those will negatively impact your score if done too often. However, with that said, consider another type of credit you don’t already have. For example, consider a small car loan if you only carry credit cards. Get a credit card if you only have loans.

Improving your credit score is a worthy goal, especially if your loan term goal is to purchase a home or a car. However, keep in mind that improving your score does take time. Here at Davis Thorpe & Associates, we offer credit optimization services. Contact us to review your credit report and discuss the best ways to achieve your credit goals.

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