How to Improve your Credit Score?
Making timely payments in full is key in establishing, or improving, a good score. And since details about your payment history, including late or missed payments, are considered public record and can stay on your credit report for years, you should aim to pay as much of their monthly balance as you can, on time, every time.
The snowball method, in which you pay off the smallest of your debts first, then move on to the next largest, is a popular way to do that. Redd Horrorcks, a self-employed voice actress, using this method, paid $39,000 in credit card debt in five years.
Aside from paying in full and on time, look to reduce your credit utilization rate, too, which is the ratio of how much you've spent on your credit card versus the card's limit. "The smaller that percentage is," according to Bankrate, "the better it is for your credit rating."
"Even if you pay balances in full every month, you still could have a higher utilization ratio than you'd expect. That's because some issuers use the balance on your statement as the one reported to the bureau." The ideal utilization rate is less than 30 percent of your available credit.
Also, especially if you have multiple cards (the average American has 3.1), try to eliminate the small, lingering balances. "One of the items your score considers is how many of your cards have balances," John Ulzheimer, a credit expert formerly of FICO and Equifax, tells Bankrate. "That's why charging $50 on one card and $30 on another, instead of using the same card, can hurt your score."
Then, he says, choose one or two go-to cards for most of your purchases: "That way, you're not polluting your credit report with a lot of balances."
Stay aware
Overall, it's important to stay knowledgeable about your credit score by checking it periodically. Most financial institutions allow you to find out your score for free, and it's a good way to track your progress.
The snowball method, in which you pay off the smallest of your debts first, then move on to the next largest, is a popular way to do that. Redd Horrorcks, a self-employed voice actress, using this method, paid $39,000 in credit card debt in five years.
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Aside from paying in full and on time, look to reduce your credit utilization rate, too, which is the ratio of how much you've spent on your credit card versus the card's limit. "The smaller that percentage is," according to Bankrate, "the better it is for your credit rating."
"Even if you pay balances in full every month, you still could have a higher utilization ratio than you'd expect. That's because some issuers use the balance on your statement as the one reported to the bureau." The ideal utilization rate is less than 30 percent of your available credit.
Also, especially if you have multiple cards (the average American has 3.1), try to eliminate the small, lingering balances. "One of the items your score considers is how many of your cards have balances," John Ulzheimer, a credit expert formerly of FICO and Equifax, tells Bankrate. "That's why charging $50 on one card and $30 on another, instead of using the same card, can hurt your score."
Then, he says, choose one or two go-to cards for most of your purchases: "That way, you're not polluting your credit report with a lot of balances."
Stay aware
Overall, it's important to stay knowledgeable about your credit score by checking it periodically. Most financial institutions allow you to find out your score for free, and it's a good way to track your progress.
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