Credit scores are so important. They tell the story of a financial picture in just a few seconds. Lenders look at these numbers to decide whether or not you are worthy of providing funds to and whether or not they can lend you money to pursue your dreams. For many, though, this number is not ideal. Due to life circumstances, unexpected financial burdens, or simply because of naivety and past mistakes, a credit score can drop quickly. But, wherever you are now is not where you need to stay. The beautiful thing about credit is that it can be repaired. It will take time, energy, and effort but there are great ways to get that number increasing into a positive position with some effort on your part. If you need to boost your credit numbers, the following are three tips that can help.
1. Be Timely on Payments
There are times in life when we all fall behind. Maybe it was a bad break at work that caused a loss of jobs or unexpected medical bills. Things can come up and they can devastate our ability to pay our bills. This, then, often leads to late payments or missed payments. A large portion of a credit score, however, is based upon the timeliness of bill payments. From the electric bill to a car payment to a mortgage and more, all of these are reported to credit bureaus. Therefore, one of the quickest, most effective, and most long lasting of ways to improve your credit is to pay all of your bills on time. Even if it is only the minimum, this payment history can positively increase your score and get it to the levels that you want and need.
2. Lower Your Ratios
Another of the biggest portions of a credit score is what is known as the debt-to-credit ratio. This ratio is based on the amount of debt you have in relation to the amount of credit that you have access to. You want your debt to credit ratio to be low, with your amount owed at a much lower amount than your credit. It is estimated that thirty percent utilization on a card is the ideal balance. Lowering your debt on the cards while increasing your credit limits will help you to make sure that you are on track to keep your finances in line and even increase your credit score. A bit of effort in debt reduction, then, can drastically increase your financial picture.
3. Be Wary Before You Close an Account
If you have accounts that are in need of help, it can be tempting to close them so you do not use them beyond your means. That is an understandable idea but can do more to hurt your financial picture rather than help it. If you feel that you cannot stop using your card, then, definitely do close it before it becomes an increasing problem. But, if you can simply rid yourself safely of the card, pay down your debts, and still leave the card open, this will help your debt to debt to credit ratio low and actually boost your score.