A higher credit score helps you get a loan on favorable terms without any inconvenience. But, the question is how you can achieve it?
Here are some simple ways you can improve your credit score.
Monitor and Improve Your Payment History
Your payment history shows how likely you are to repay debts on time. You must monitor it regularly, as it can significantly affect your credit score. Check your credit card report at least once a year and look for mistakes. You can ask your financial institution to send you a notification on the fall of credit available on your card. These alerts will help you manage day-to-day finances and credit payments.
Along with monitoring your payment history, also consider improving it. This will boost your credit score and lead to lower interest rates, more loan options, and higher credit limits.
To improve your payment history, you should:
- Pay bills on time
- Keep balances low on your credit cards
- Not open many new accounts within a short time period
- Pay down all the revolving account balances
Limit Your Credit Checks
Your credit checks, also known as credit inquiries, count toward your credit score. Every time you apply for a loan, the lender will ask for your credit report, which will be recorded as an inquiry and lead to a negative effect on your credit score.
If there are too many credit checks on your report, lenders may think that you are urgently seeking credit and trying to live beyond your means. Therefore, you should apply for credit only when you need it to limit the credit inquiries.
You can control the number of credit checks on your report by:
- Limiting the number of times you apply for the credit
- Checking the credit report regularly
- Considering a credit freeze in case you are concerned about identity thefts
Look for Tradeline Affiliate Programs
The Tradeline affiliate program can be an additional source of income and can boost your credit score. They allow you to earn money by promoting tradelines. These programs can establish creditworthiness and help you qualify for loans with favorable terms.
Diversify Your Credit
If you have only one type of credit, your score may be lower. Therefore, you should diversify the types of credit you have to take your credit score to the next level. Try to have a mix of credit types, such as a line of credit, a car loan, or a credit card.
A mix of multiple credits can improve your score, but you must ensure you pay back all of them on time. Otherwise, you will end up ruining your credit score by taking on too much debt.
Do Not Close Your Old Accounts
The age of your oldest account heavily influences your credit score. A longer credit history leads to a higher score. If you close your old accounts, you will lower the average of your accounts. Therefore, you should never close your old accounts, even if you do not use them. Consider putting small recurring purchases on them and setting automatic reminders to ensure you pay off your balance on time.
