Best Ways to Improve Credit Scores
If you’ve ever missed a credit card payment or closed a credit card account too early, you’re not alone. Unfortunately, missing a credit card payment or closing an account is one thing that negatively impacts your credit score. Having a good credit score when applying for a mortgage, may help you get access to more loan programs with more favorable interest rates. The following reviews some of the best ways to improve credit score!
Set up Payment Reminders
Schedule reminders on your calendar for when your bills are due. This way, it will be easier to stay on top of your monthly payments, and hopefully, avoid any late fees!
Try to Lower your Credit Utilization Ratio
If you were maxing out credit cards in the past, try to only spend about 20% of your credit limit for a couple of cycles.
Make Sure Your Credit Reports are Accurate
You can check your credit score and your credit reports with any of the three leading reporting agencies. Every once in a while, it may be smart to check your credit report to make sure all of the information is accurate. You may try to report or reverse any mistakes.
The most important thing to remember is to be patient. Improving your credit score doesn’t happen overnight. It may take a couple of months of continuous, healthy credit habits to start to see some improvements.
How Long Does it Take to Improve Credit Score?
The length of time depends on the significance of the action that impacted the score. A minor impact may be closing an account, whereas a more significant effect may be defaulting on a loan. You may notice minor improvements in a couple of months and more significant improvements in a year or two.
If you are looking to apply for a mortgage and have had recent late payments, we suggest focusing on making consistent, on-time payments for a few months before applying for a mortgage.
What Hurts your Credit Score?
While you’re focused on improving and maintaining your credit score, it’s important to refresh yourself on what hurts your credit score to avoid any negative impacts.
- Late payments
- Canceling your credit cards
- Applying for too many credit cards
- Filing for bankruptcy
- Being an authorized user on an account with poor payment history
- Having only one trade line (credit card or student loan, for example)