If you’re on a mission to qualify for low-interest loans, most companies will require you have a credit rating of at least 690 to qualify. Unfortunately, only about 67% of Americans hit this mark, leaving a solid number struggling with debt or with no credit rating at all.
Fortunately, there are a number of ways you can improve your credit rating score – and most of them are pretty simple!
Whether you are looking to qualify for that mortgage loan or you just want to get a better handle on your finances for the future, you’ve come to the right place. Follow along to discover 15 steps to fixing your finances with these credit boosting tips and tricks.
1. Check for Mistakes
Your poor credit score may be nothing more than a mistake. Before you panic about a low rating, take the time to really look through your credit accounts and find any errors. Even something as small as an incorrect address could actually impact your score.
Fortunately, this is a pretty easy fix!
Get in touch with your personal finance company to have any errors or mistakes rectified as quickly as possible. Once you’ve got things straight, keep a close eye to ensure any issues are addressed quickly and efficiently.
2. Make Your Payments
While this seems pretty obvious, one of the key steps in improving your credit rating score is making your credit payments on time and in full.
Your personal finance company wants to see that you are responsible with your money, and a bit part of that is paying off any debts you have in a reasonable timeframe.
Whenever possible, pay off your credit cards in full and never let payments drift beyond the due date. If you have trouble remembering, consider setting up automatic payments to stay on track.
3. Keep Up with Bills
Your credit card payments aren’t the only ones that impact your score. Believe it or not, missing a phone payment, sending rent in late, or having one of your regular payments bounce can significantly impact your score.
Your best bet is to schedule your finances so that you are never short of money on bill payment days.
Again, setting up automatic payments is a great way to ensure you don’t miss your due date. In fact, allowing accounts such as your phone bill and utilities to come out automatically actually improves your chances of getting approved for those great personal loan rates.
4. Reduce Applications
Every time you apply for credit, the application will leave a footprint on your credit score. This is true whether or not that application is approved.
To prevent this, reduce your applications for loans to no more than once every three months. Constantly asking for credit sends a signal that you aren’t able to manage your finances appropriately.
5. Keep Utilization Low
Just because you have credit, doesn’t mean you should use it. In fact, utilizing too much credit can actually harm your score.
Instead of maxing out your credit cards each month, try to keep your utilization at 30% or less. The unused credit will go a long way to send that positive message to lenders and boost your chances of getting a larger loan.
6. Budget Your Spending
One of the most common reasons debt gets out of hand is because of poor financial planning.
If you find yourself having to take out payday loans or missing repayments, it’s time to take a long hard look at your spending habits.
Create a personal finance spreadsheet of all of your expenses and structure a budget that will allow you to make ends meet. You could even opt for one of the best finance apps or pick up personal finance books to help you make a plan and stick to it.
7. Consider Consolidation
If keeping up with large repayments and backed-up debt feels simply unattainable, you might be a good candidate for credit consolidation.
These personal loans allow you to combine all of your debt into one, manageable payment. While this can take a toll on your credit rating at the start, paying off your loan in this way is still better than letting it pile up.
At the end of the day, less debt and more responsible payments equal better credit rating scores.
8. Use Credit Monitoring
Some of the best personal finance apps allow you to actually monitor your credit as you go. This can be incredibly handy for catching those little mistakes we mentioned earlier and disputing any errors.
By monitoring your credit, you’ll also have a better idea of where you sit and be able to plan out applications more productively.
While you can’t guarantee approval, knowing your chances can reduce the number of applications you end up getting rejected for.
9. Unlink Sinking Ships
Have you ever had a joint account with a partner or parent? Believe it or not, their low credit score could actually be pulling yours down too.
Any joined accounts will pool both you and the other account holder’s credit together. If you’ve signed up with a serial spender or payment procrastinator, this could be seriously dangerous for your score.
Sever ties with these credit plungers by removing the association with their account as quickly as possible.
10. Seek Help from Solid Sources
On the other hand, utilizing accounts with credible candidates could be a great way to boost your score.
The joined account pool works both ways, which means piggybacking on someone else’s great credit score can boost yours too! Consider asking family members who have a great rating for signing authority on their credit cards. While you won’t actually be actively spending on their cards, your score will benefit from their good habits!
11. Don’t Shut Down Accounts
Have old credit cards you’ve paid off? Don’t close down the accounts just yet.
Remember how we mentioned that low utilization rate? Keeping your paid-off accounts open can actually help with that. Beyond this, closing those accounts shortens the lifespan of your credit and can make your credit history more difficult to track.
12. Pay off Debt with Savings
Your credit score can’t track your savings account. This means that while you may have a substantial amount of money stashed aside, those funds have no weight on your overall credit rating.
At the end of the day, you’re better off to have less debt on your side if looking to apply for larger personal loans such as mortgages or car loans.
13. Use a Credit-Building Card
If your credit history is a bit skinny, using a credit-building card is a great way to bulk it up.
These cards generally come with a higher interest rate but are a great tool for getting some positive history on your side. By keeping your utilization low and paying off these cards as quickly as possible, you’ll begin to build a portfolio for your credit that will serve to impress down the road.
14. Stay Put
Did you know moving around can actually lower your credit score? That’s right, packing up and moving house on a regular basis sends a message of inconsistency and unreliability to credit companies.
While you may just enjoy the change of pace, consistency is key when it comes to building a great credit portfolio. Whenever possible, stay in your current home and get comfortable with your service providers. Longevity is a great friend to have on your side.
15. Prove Proper Money Management
While this can be tricky, you do have options when it comes to proving your money management skills. By connecting your accounts and allowing personal finance companies to have access to a more thorough spending history, you can use your account responsibility to improve your chances of fixing your finances.
Things like an investment account, savings deposit history, or even little commitments like a Netflix or Spotify account can add up over time to give you a credit history you can be proud of.
This is a great option for those with poor credit or no credit to start building a well-rounded portfolio.
Credit Rating Score Tips for Fixing Your Finances
Now that you know these 15 simple tips for boosting your credit rating score, it’s time to set to work. From picking up highly rated personal finance books to applying for a personal loan to consolidate credit, we’re confident you’ll be well on your way to fixing your finances with these steps.
Want more advice for managing your money? Check out our other articles to discover everything you need to know to stay on track with your payments, manage your lifestyle spending, and more!
