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Effective and Non-Effective Ways to Improve Your Credit Rating

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You can find a number of resources that will teach you how to improve your credit. While some are tried-and-tested methods, others are nothing but misconceptions. Here you will see the difference between methods that work and those that don’t.

Effective Ways

Pay on time. You will always see this in every book, forum, or website that you visit, and this tactic never fails. Making timely payments is one of the key ingredients to a healthy credit score. If, for some reason, you tend to forget about your dues, you can enroll in automated payments to make it simpler. Preferably, if you can afford it, make payments by your report date and not on your due date for better results.

Check your credit report regularly. Not many are aware of the magic brought by reviewing your credit score regularly. Although this cannot exactly cause a dramatic increase, you can easily spot mistaken entries that are hurting your credit score, such as incorrect names, dates, credit inquiries, missing accounts, and accounts that don’t belong to you. Disputing these errors can cause a major credit overhaul, depending on what you have found.

Contact your creditors. Don’t just assume that your lender will rear its ugly head once you failed to make your payments on time. In fact, it’s better if you call them to explain your current situation rather than avoid the calls and letters at all costs. If you try reaching out to your creditors, you might actually discover how helpful some of them can be.

Go easy on your credit limit. The ratio of your balances to your credit limit, also known as credit utilization, is another important element of your credit score. if it’s impossible to keep your balances far from your limit, request to have your limits increased.

Non-Effective Ways

Closing all of your credit cards. While you should consider closing most of your credit cards if you are financially struggling to pay off your debts, it’s a completely different scenario if you’re looking to increase your credit score. Before you take the scissors and begin to cut down your plastics, make sure you leave these cards open- oldest credit cards, credit cards with balances, your high-limit credit card, and your credit card with the best terms.

In addition, leaving at least one credit card open is important to maintain a healthy mix of credit in your history. Lenders tend to look at the types of credit that you have, and keeping a credit card on the mix can help maintain good credit.

Apply for new credit cards. If your goal is credit score enhancement, applying for new credit cards will not take you there. In fact, a new credit card will affect your average age of credit, which will in turn hurt your credit score.

Hiring a credit repair company. Credit repair companies are not the solution to bring your credit to the next level. In fact, you would only spend money that is better spent on something else, such as debt repayments. There’s nothing that a credit repair company does that you cannot do on your own, and you have to realize that the source of credit improvement is no other than yourself.

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