Worried about your credit score? We get it – credit is confusing. In many ways it feels like you have no control over this thing that determines whether you can get a car, apartment or even a new cellphone without a broken screen. But having a healthy credit score or even improving a bad credit score doesn’t require becoming an expert. Here are 9 easy ways to get you started, listed in order from easiest to most difficult.
1. Embrace Autopilot Payments
Set up automatic payments for your credit cards and loans to dodge those pesky late fees and boost your credit score effortlessly. We know this sounds simple (this is an easy list, after all). But payment history can account for 35% of your overall credit score, and a single late payment can have a significant negative impact on your credit for up to 7 years.
2. Pause Before Cancelling Your Credit Card
Remember that first credit card you got when you turned 18? Even if you hardly ever use it, it’s helping you. Keeping old accounts open extends your credit history, and the length of your credit history accounts for about 15% of your score.
3. Keep Your Credit Utilization Ratio Below 30%
It’s a myth that carrying a balance on your credit card month-to-month does anything positive for your score. What isn’t a myth is that keeping your credit card balances low will help. Credit utilization ratio, the amount of available credit you have compared to the amount of credit you’re using, accounts for about 30% of your overall credit score. So if you have a credit card that has a limit of $800, try not to spend more than $240.
4. Keep Tabs on Your Credit Report
You have three credit reports, one from each of the three bureaus (TransUnion, Equifax, and Experian). The information in your reports is what is used to calculate your credit score. Unfortunately, it’s not uncommon for mistakes to appear on credit reports. Mistakes could be anything from misreported credit card debt, to an amount in collections that you already paid off. You can download a free copy of your credit reports directly from the bureaus by using the official website, AnnualCreditReport.com. You can also keep tabs on your credit reports by using a credit monitoring app (like, ahem, the Credit Report Card we offer here at Credit.com) but this won’t be as accurate as actually checking copies of your reports yourself.
5. Mix Up Your Credit Types
Your credit mix accounts for about 10% of your overall score. Credit mix just refers to the variety of credit accounts you have. Someone with a car loan, credit card and a mortgage, for example, would have a better mix of credit than someone with just a credit card. If you want to add more to your credit mix, consider adding a credit-builder loan.
6. If You’re Rejected, Try Something Different
We get it – sometimes you need that credit card, or car, or apartment right away. But if you apply for too many new lines of credit in too short a time period, it can hurt your credit score. Hard credit inquiries, when a loan officer or a credit card issuer checks your credit, for example, make up 10% of your credit score. Ordinarily, a single hard inquiry won’t do any lasting harm, but if you were rejected for a credit card and then applied to 10 other credit cards and were rejected by those as well, all of those hard inquiries add up and can hurt your credit – making it even harder for you to be approved. If you’re ever rejected for a line of credit, consider alternative credit cards or loans, or maybe spend some time building up your credit before applying again.
7. Become an Authorized User
Got a financially responsible friend or family member? Ask them to add you as an authorized user on their credit card. You’ll piggyback off their good credit behavior like a champ, and it can help beef up your score. Just make sure it’s someone that you trust, because their bad behavior can hurt your credit, and vice versa.
8. Negotiate with Creditors
If you’re juggling bills, don’t panic. Reach out to your creditors and see if they’re open to negotiation. Sometimes they can offer payment plans or even settle for less. It’s worth a shot.
9. Be Patient, Grasshopper
Rome wasn’t built in a day, and neither is a great credit score. Be patient and consistent with your good credit habits. Over time, your efforts will pay off. In conclusion, boosting your credit score in 2024 doesn’t require a miracle – just some consistent effort. You got this, and if you need a little extra guidance you can always sign up at Credit.com.
