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5 Strategies to Build and Improve Your Credit Score

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5 Strategies to Build and Improve Your Credit Score 1

Understand the Importance of a Credit Score

Before jumping into ways to improve your credit score, it’s important to know the value that a good credit score can bring. A credit score is a reflection of your creditworthiness and ability to pay back loans and debts. This score is crucial when applying for loans, credit cards, or buying a home. A higher credit score means you’re more likely to be approved for credit with better rates and terms. Knowing this, it’s easy to see why having a good credit score is so important.

Make On-Time Payments

One of the most significant factors affecting your credit score is your payment history. Late payments can heavily impact your credit score and can stay on your credit report for up to seven years. It’s vital to make sure your payments are made on-time each month. Putting email or phone reminders in place can help with this task. If you struggle with making on-time payments, consider setting up automatic payments to avoid missing deadlines.

Become an Authorized User

Becoming an authorized user on a family member or friend’s credit card can help improve your score. The credit card issuer will report payment history on both the primary and authorized user’s credit report. If the account is in good standing, it can positively impact your score. However, be cautious when doing this and only become an authorized user on someone’s account you trust. Remember, late payments or high credit utilization can also negatively impact your score and the primary account holder’s score.

Keep Credit Utilization Low

Credit utilization is the amount of credit you have used compared to your available credit limit. Maintaining a low credit utilization can positively affect your credit score. Experts recommend keeping utilization below 30 percent on each card and across all cards. One way to keep track of this is to regularly check credit reports or download a credit app to help monitor credit utilization and payment history.

Monitor Your Credit Reports

Finally, regularly monitoring your credit reports can give great insight into what’s impacting your score positively and negatively. Checking credit reports regularly can help you identify errors and address them with the credit bureaus. Credit reports can be obtained from the three major credit bureaus, Equifax, Experian, and TransUnion, once a year for free.

Improving your credit score may seem intimidating, but following these strategies can help lead to positive changes. Remember, building and improving credit takes time, patience, and consistency. To ensure a thorough understanding of the topic, we recommend this external resource that offers additional and relevant information. Investigate this in-depth content, immerse yourself further in the topic and uncover fresh viewpoints!

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