In a previous post, we talked about the makeup of your credit score and what goes into it. Your credit score is important for many reasons and today we will talk about how to raise it. An improved credit score means you are more likely to receive better rates on everything from mortgages and credit cards to loans.
There is no magic formula and major improvement on your credit score takes time. Some of the following tips may seem like small things, but doing them consistently goes a long way to helping your cause. By using these tips from Iowa State Bank you can put yourself on the right track to improving your credit score today.
Tips on raising your credit score:
- Never miss a payment, even if you’re only paying the minimum. Commit to making a payment every month, and when you’re done paying down your balance, you’ll seem like much less of liability to lenders than if you consistently miss payment dates.
- Only use about 10 percent of what your credit limit is. The smaller the percentage is, the better your credit score. For example, if you have a store credit card that has a $4,000 limit, only use around $400 of that and pay it off right away.
- Pay off cards with small balances. Gather up all those credit cards and pay off the balances, so you are not piling so many cards onto your score. Choose one or two cards that you can have as go to cards for purchases.
- Only open new credit accounts as needed. Opening various store cards or other types of credit cards can hurt you. Make sure you keep track of your finances and use those cards rarely.
- If you don’t have a credit card, apply for one and use it lightly. Use it for something like filling up for gas every week. This is an expense that’s already in your budget, so using your credit card then immediately paying off the balance is an easy way to use credit without it getting the best of you.
Raising your credit score can benefit you greatly when it is time to buy a new house or new car and you need a loan. Again, this process takes time, so give yourself about six months of hitting all the above milestones. Then, contact Iowa State Bank if you have a loan need and we can we see what kind of rate you are eligible for.