A good credit score is a window of opportunities. It gives you access to affordable loans, high-end credit cards, and the best deals on mortgages. In other words, it makes you creditworthy from the lenders’ perspective. But what exactly is a good credit score? According to FICO, a score of 700 is considered ‘good’. This may not be an ‘excellent’ score, but it’s high enough to help you qualify for the best terms on most loans. However, close to 43% of the credit scores across the country are under 700. If yours is one of them, here are some smart tips to give your credit score a quick boost.
Strengthen Your Credit Score with 4 Smart Moves
- Make timely payments. Your bill payment track record is a major determinant of your credit score. Late payments stop your credit score from rising, and repetitive missed payments can cause further damage. So always pay your bills on time. The best way to do this is to set up automated payments.
- Cut down your debt. The credit utilization ratio determines 30% of your credit score. This is the ratio of your debt to your available credit. A good credit utilization ratio is about 35% or lower. If yours is higher than this, you should take immediate steps to lower your debt and increase the amount of available credit. Do this by paying off high-interest accounts one by one, without opening any new credit accounts.
- Check your credit report. You’re entitled to a free credit report each year, from every agency. Get a copy of your report and do a thorough check. It’s not uncommon to find errors in a credit report. Some such error could be causing a dip in your credit score. So make sure you check your credit reports at all three credit bureaus. If you find any inaccurate or missing information, file a dispute with the agency and the creditor.
- Get a good mix of accounts. Account mix refers to the mix of your installment accounts and revolving accounts. Installment accounts refer to mortgages, car loans, and personal loans with fixed monthly payments spread over a certain term. Revolving accounts include credit cards and lines of credit that come with a credit limit. A good mix of these two can boost your credit score and convince lenders that you’re capable of handling both types of accounts.
However, refrain from opening new credit accounts while you’re in the process of improving your credit. Any hard inquiry will make a negative impact on your score. So make timely payments, reduce your debts, and handle your credit accounts prudently. These are the smartest, surefire ways to push your credit score closer to perfection.