Improving your credit. Does this seem like an impossible task that fills you with dread and anxiety? Don’t worry; it doesn’t have to! While improving your credit is a process that does take some time, it’s not as intimidating as it sounds. Take a look at these four relatively easy things that you can do to start improving your credit today.
1. Pay bills on time.
Late payments, even if only a few days late, can have a significant negative impact on your credit score. Payment history is one of the biggest influences on credit scores.
If historically you haven’t been great about paying bills on time, you can turn things around if you begin making payments on time. The longer you pay bills on time, the more your credit score should increase. Since older credit issues have less of an impact, poor credit performance won’t haunt you forever.
One way to stay on top of your bills is scheduling payment reminders. Many banks offer payment reminders that can send you an email or text reminding you that a payment is due. Another way is by enrolling in automatic payments through your credit card and loan providers. Automatic payments are withdrawn from your bank account on a specified date, so you don’t have to worry about anything after the payment schedule is set up.
2. Increase your credit limit.
While this may sound counter-intuitive, increasing your credit limit can be very helpful in improving your credit score. One thing that factors into your credit score is credit utilization, which is the ratio of how much money you owe compared with how much credit you have.
For example, if you have a $2,000 credit limit and a $1,000 balance, your credit utilization is 50 percent. If you’ve maxed out that $2,000 limit, your utilization is 100 percent. The less credit you are using, the better it is for your overall credit score.
So if you’ve maxed out your $2,000 card and get a limit increase to $5,000, you’ve instantly cut your credit utilization rate in half. But a word of caution, it’s crucial that you don’t spend any of your new credit. If you do, it defeats the purpose of getting a limit increase.
3. Make multiple small payments.
If you can’t, or simply don’t want to increase your credit limit, you can lower your credit utilization by making multiple small payments or micropayments. So rather than making payments on your credit card bills once a month, you make 2, 3 or 4 payments. You can even treat your credit card as a debit card, paying online as soon as you see a purchase is posted.
4. Check free credit reports & dispute errors.
Everyone has three credit reports — one from each of the 3 major credit bureaus: Experian, Equifax and TransUnion. It’s easy to check your credit reports from each of these reporting agencies. Each year, you’re entitled to a free copy of all 3 reports under the Fair Credit Reporting Act.
Since credit scores are based on the data in your credit reports, it’s extremely important to make sure that all of that information in the reports is accurate. If there mistake or discrepancy it can have an impact on your credit score. In some cases requesting a correction to a mistake in your credit report can have an immediate positive effect on your score.
Good credit can have many benefits. One of them being, it is easier to get financing for large purchases, like cars. However, if you are still on the path to improving your credit but need a vehicle, consider Car City. We strive to help individuals find exactly the car they want, regardless of their credit situation. Our car financing is based on your income, not your credit score!
We have one of the largest selections of reliable used cars in Michigan and Indiana. Take a look at our inventory today!