Boost Your Credit Score, Boost Your Financial Health
Last updated March 29, 2023
Improving your credit score can give you access to better rates on your mortgage, better offers on a new loan, and better financial opportunities overall. We’ve rounded up the top five tips that will help you boost your credit score fast.
1. Check Your Credit Score Often
My FICO advises you carefully review your credit report from all three credit reporting agencies. Check for errors and dispute inaccurate information by contacting both your lender and the credit reporting agency.
You can monitor your credit on sites like Free Credit Report that allow you to keep tabs on your credit in real-time.
Do you own a small business? Try these strategies to fuel your business’s credit growth »
2. Close to Your Credit Limit? Pay It Off
Even if you pay your credit card on time, every time, you may be negatively impacting your credit score if you have a balance that’s more than 35% of your credit limit. That means if you have a card with a $10,000 limit, you’ll want to keep your balance under $3,500.
3. Don’t Close Old Accounts
While your credit history stays on your credit report for seven years, closing a card if you still have balances on other cards increases your credit utilization ratio. So, if you have three cards totaling $20,000 in credit and you have $5,000 of charges among them, that’s a 25% utilization. If you close a card and you have $15,000 of credit with a balance of $5,000 among those two cards, you have a 33% utilization. That may reduce your credit score. Check out our video on how credit utilization works.
Lenders also may look favorably on those with an older “credit age,” or the average age of your credit accounts. If you close that account you opened in college, it makes your credit age appear younger.
4. Open Up a New Credit Card
Opening a new card can not only increases your total credit line (improving your credit card utilization mentioned above) but also shows the credit bureau that you have the ability to manage different types of credit. For example, taking on a car loan or opening a credit card account with a store diversifies your “credit mix.” Just make sure you know the interest rate, signup fees, and any additional costs involved.
5. Stay Under—Well Under—Your Credit Limit
Just in case you skimmed over point number two, it’s important to keep your credit utilization low. Opening a new credit card doesn’t mean you have to go on a spending spree. You’ll want to monitor both your per-card and overall credit card utilization.
When you boost your credit score, you’ll find you unlock new opportunities for improving your financial situation. For example, a good credit score allows you to access loans with better interest rates and tap into the resources you already have, such as the equity built in your home.
Of course, staying below your credit limit and paying off high balances means tackling your bad debt. Start paying down debt (and improving your credit score) with your copy of The Homeowner’s Guide to Leveraging Good Debt and Eliminating Bad Debt.
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You should know
We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.