Your credit score is the first impression of you when it comes to lenders, and it can tell a lot about you, if you are a responsible borrower, or if you do not take your finances seriously. Whether you already have great credit or you are in need of improvement, you should always strive for the best to take advantage of the best rates on the market.
Take a Look at Your Credit Report
The fastest way to improve your score may just be because of misinformation on your report that needs to be cleared up. You should at least look at your credit report once a year to make sure that all personal information and accounts are up to date. Keep in mind that reports are usually at least a month behind, so if you just made a large payment or closed an account recently it may not have caught up yet, so not to worry.
Pay Down Any Debt
If you have a spending issue now, the first plan of attack is to stop using a credit card to avoid continuing to rack up the account balance that you are currently not able to pay off, so why keep increasing it. Cut up the card if you have to, whatever keeps you from spending, and really focus on paying down debt. If you are carrying a balance over each month, you will be charged interest, so you will need to make large payments in order to see a reduction of the principal balance, instead of the payment all going towards interest charges.
Keep Accounts Open
A common misconception is that once you pay off an account, the first instinct would be to cut up the card and close the account. While cutting up the card is not a bad idea so you can avoid using the credit card if you previously had a spending problem, but closing the account could actually hurt your score. A portion of your credit score is based upon the overall debt to available credit, so if the account is closed, you could drastically be reducing your available credit and make your debt situation look a lot worse than it actually is.
Set Up Automatic Payments
The biggest advice to give, is pay on time. Late payments that are thirty days past the due date can stay on your credit report for up to seven years, so to show lenders that you are a responsible borrower, make sure it is paid on time. Not only to keep your credit report in check, but paying even a day late can incur late fees or hike up APR, which will make interest charges skyrocket.
Although it is a small portion, credit inquiries do make up part of your credit score, so every time you apply for a new credit card, personal loan, or mortgage, when they pull your credit, it affects your score. Try and make sure that if you are having your credit pulled, you are looking to proceed if it improves your situation such as a mortgage refinance to a lower rate, or a credit card with say 0% APR.