5 SImple Ways to Improve Your Credit Score

1: Never Pay Late

Late payments can be the most damaging factor to your credit score. Creditors do not like to lend money to people who are not going to pay on time. When they do, they charge higher (sometimes substantially higher) interest to cover their losses.

Any payment over 30 days can significantly impact your credit score. Beyond 90 and the affect on your credit report is even stronger. Note here that a payment that is even a day past due is considered to be 30 days late in the eyes of the bank.

One way to keep from paying late is to set up automatic payments on your account Most banks allow for automatic payments to be taken directly from your bank account. You don’t have to remember when exactly they are due, because the payment is taken out automatically by the lending institution.

2: Keep Credit Cards to a Minimum

When it comes to credit cards, the fewer you have the better. However, creditors do like to see you with more than one card. 3 cards is the preferred amount. Less is not necessarily bad, but more can often be seen in a negative way by creditors.

The negative effect isn’t just from the active credit cards that you have, once you fill out the credit application the negative effect is noticed. While you might think it is a good idea to apply for all of those credit cards that come to you in your mailbox, this is a bad idea. If you are looking for a new credit card, do your research and find the ones you think it is best to apply to. Don’t just fill out a bunch of credit cards applications at once, take your time.

3: Keep Outstanding Debt to a Minimum

The less outstanding debt that you have at any time, the better your credit score will be. Even if you have relatively low outstanding debt and the payments are quite manageable, it is better to pay off these debts as quickly as you can. Once the debts are completely removed your credit score will improve.

For your credit cards, it is best to keep all your cards at about a 30% debt ratio. Having some debt is good (obviously you must pay it off), but don’t let the amount of debt grow too near to your limit. This is worrisome to creditors and will bring down your credit score.