How Do I Improve My Credit Score?

How Do I Improve My Credit Score?

When it comes to credit scores, individuals should strive for something above 600. Unfortunately, millions of Americans see a lackluster score attached to their names. A lower score can lead to issues while taking out loans and in other situations. Good credit makes a lot of financial situations easier on individuals. These days, “How do I raise my credit score?” is an extremely common question.

Know Your Score At All Times

Dozens of websites offer credit scores to consumers nowadays. Luckily, consumers don’t necessarily have to pay to access their current score. Sites like Credit Karma and provide free score access. Many credit cards include a credit monitoring service, which often provides scores as well. In most cases, these scores are estimates rather than a consumer’s actual FICO credit score banks and other lenders see.

Good Credit Score Benefits

A FICO score above 600 comes with a variety of benefits for consumers. With a decent score, an individual will find it easier to take out a loan or open a new credit card. Higher scores often translate into better interest rates as well. This means consumers can actually save money with a better score. Simply put, scores between 600 and 800 make financial transactions easier in many cases.

Bad Credit Score Consequences

On the other hand, a low score comes with quite a few downsides. Sub-600 scores can make securing a loan difficult, and sometimes impossible. Too low of a score scares off potential creditors, so some consumers cannot borrow money at all. Plus, a low score all but guarantees a higher interest rate on credit cards and loans. Such consumers effectively pay more money on loans, and they often cannot borrow as much money as those with a better score.

Improving Your Score Over Time

If you’re unhappy with your credit score, then you need to make changes today. First of all, you need to start accessing your credit report and score once per month. You should comb through your credit report to check for mistakes and inaccuracies. Checking your own credit doesn’t penalize your score. However, when you apply for credit, lenders do a “hard” pull on your report. Too many hard pulls can drag your credit score down.

Any past due credit accounts should be remedied right away. You might be current on your accounts, but that’s not enough, either. From there, you’ll want to start paying down balances to free up available credit. Your score will look much better if you’re using only 30 of available credit compared to 75 of it after all. Speaking of debt ratio, a credit limit increase boosts your score by giving you more available credit.

Bad Credit Doesn’t Have to Last Forever

Many consumers find themselves stuck with a low credit score because they repeat the same mistakes again and again. In the end, you need to break the cycle and change these habits. Doing so can lead to slow, incremental improvements to your FICO score. Six months to a year of improvements can make a huge difference on your score. Without a doubt, your goal should be to achieve a FICO score above 600.

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