5 strategies you can implement within 30 days
If your credit score is less than stellar or you’re looking to improve it for better interest rates, there are a variety of tangible strategies you can employ to boost your credit score in a relatively short time:
1. Pay your bills on time
Always pay your bills on time. Failure to do so, even one time, can show up on your credit report and negatively impact your score. If you have a history of being even a day or two late on paying your bills, fix it now, and set up a schedule to ensure you don’t miss your bill-pay deadlines or set up autopay.
2. Don’t use too much credit
Credit utilization also impacts your score. If you have three credit cards, all of them used to the max with minimal to no available balance, that’s going to negatively impact your score. Reduce your credit card balances.
Generally, creditors prefer to see your credit utilization standing at 30% or less. That means if you have a credit limit of $20,000, you should use $6,000 or less of that credit. And if you want to have an excellent credit score, that credit utilization ratio should stand at 10% or less.
The good news? Credit utilization fixes can impact your score really quickly. If you pay down a high balance one month, you’ll likely see a dramatic improvement in your credit score the next month.
3. Have a mix of credit
It’s important to show you can manage a variety of credit accounts. Having only credit cards, for example, can negatively impact your score. Creditors want to know you can handle both installment accounts (like a mortgage, auto, or personal loan) as well as revolving accounts (like credit cards). If you only have an auto loan, consider opening a credit card account to enhance your credit mix.
4. Establish a credit history
Once you pay off a credit card, it’s tempting to close the account to prevent further usage of it, but don’t … especially if you’re getting ready to apply for a mortgage loan. Lenders like to see credit history, and the longer you’ve held a credit account successfully, the better. So even if you’ve paid off a credit card you’ve had for 10 years, don’t close the account. Plus, a credit card with a $0 balance is a boon to your credit utilization score!
5. Don’t over-apply for credit
If you know you’re likely going to be house shopping and applying for a mortgage loan in the coming year, avoid applying for new credit accounts, whether that’s an auto loan or a credit card. While applying for preapproval on a mortgage loan won’t negatively impact your score, applying for three new credit cards will.