How to Raise Your Credit Score

Introduction

A healthy credit score is important when it comes to achieving your financial goals, especially when it comes to your living arrangements. If you would like to buy or rent a home, your credit score will be pulled to determine your ability to make payments every month. In this blog post, we’ll share practical tips and strategies to help you raise your credit score and pave the way for a brighter financial future.

Know Where Your Credit Currently is

If you would like to work on your credit, it’s important to know where you currently stand. You can use free resources such as Experian or CreditKarma to check your credit score for free. This lets you know where you should delegate your efforts. If you see any errors or discrepancies, you have the right to dispute accounts that you feel are inaccurate or not your responsibility. This is especially important if you have been the victim of identity theft in the past.

Credit Score

Payment History

Payment history is heavily weighted on your credit score (about 35%) since lenders want to view how reliable you are with your payments. When you make late payments, it can negatively impact your credit score. The severity of the impact depends on various factors, such as how late the payment is, the frequency of late payments, and the type of credit account. More recent late payments tend to have a more significant impact on your score. Missing payments altogether is more damaging to your credit score than making late payments. The more on time payments that you make, the better it reflects on this portion of your credit score. You can even include some utility and phone bills by using Experian Boost. Set up payment reminders or autopay to never miss a due date.

Reduce Credit Card Utilization

The next highest impact is credit card utilization. The goal is to keep your credit utilization rate under 30%. Don’t rely on the minimum payments that your credit card charges, if they have a high interest rate you may not be reducing your balance by much. If it’s possible, pay off the balances in full each month to avoid the interest charge and demonstrate reponsible credit management. If you have a high balance, consider spreading out your expenses across multiple cards instead of maxing out a single card, as this can positively affect your credit utilization ratio.

Credit score

Build a Diverse Credit Portfolio

Having a mix of different types of credit can enhance your creditworthiness. This may include credit cards, installment loans, or a mortgage. However, be cautious and only take on credit that you can comfortably manage. It’s essential to strike a balance between demonstrating credit responsibility and avoiding unnecessary debt.

Keep Old Accounts Open

Closing old accounts may seem like a logical step, but it can negatively impact your credit score. Lengthy credit history can be advantageous, so if you have older accounts in good standing, keep them open. Their longevity adds credibility and stability to your credit profile, positively influencing your overall score.

Hard/ Soft Inquiries

When applying for new credit, do so strategically. Multiple inquiries within a short period can lower your credit score. However, credit-scoring models recognize that individuals may shop for the best rates on loans or mortgages. Thus, credit inquiries made within a specific window (typically 14-45 days) for the same purpose are typically counted as a single inquiry. Plan ahead, research your options, and make multiple applications within this timeframe to minimize the impact on your credit score.

Credit score

Monitor Your Credit Score Regularly

Maintaining vigilance over your credit is crucial for its long-term health. Regularly monitor your credit report for any changes, errors, or signs of identity theft. Utilize free credit monitoring services or consider enrolling in a credit monitoring program to receive alerts regarding any significant changes to your credit profile.

Final Words

Improving your credit score is an investment in your financial well-being. By implementing the strategies outlined above, you can take control of your credit health and create opportunities for a brighter future. Remember, building a strong credit score takes time, discipline, and consistent financial responsibility. As your trusted property management company, we encourage you to take proactive steps today and watch your credit score soar towards new heights.

Disclaimer: The information provided in this blog post is for informational purposes only and should not be considered as financial advice. Please consult with a qualified financial professional for personalized guidance based on your specific circumstances.

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