Top Tips To Help You Improve Your Credit Score

As you may know, having a good credit score is important for a number of reasons. Not only does it indicate that we are managing our money correctly, but a good score can also bring several advantages. These range from helping us to rent an apartment or apply for a credit card, to bring able to buy a cell phone without having to prepay or put down a security deposit. 

Conversely, having a bad credit score can have a far-reaching negative impact – not only on your financial health but on your ability to make purchases, secure a tenancy agreement, and perhaps even get the job you really want.

If you’re worried that your credit score isn’t high enough, the good news is, there’s no need to despair. Read on for some helpful tips on how to boost your score so you can enjoy all of the benefits that come with having great credit. Alternatively if you are in the city and might want some professional help you have many options for a Chicago credit repair consultant to help with your unique situation. 

What Is A Good Credit Score?

First things first – if you’re not sure what a good credit score amounts to, according to FICO’s credit scoring model, your number should fall between 670 and 739 to be rated ‘good’. The highest achievable score is 850. 

As of 2021, the average American credit score had climbed to 714 and 71% of Americans had a credit score of 670 or higher. 

What If Your Credit Score Suddenly Drops?

Unfortunately, fluctuations in credit scores can occur, sometimes seemingly for no reason. Usually these are nothing to be alarmed by, but sometimes the drop can be substantial. 

For example, while you may usually have a good credit score, you may find that, all of a sudden, your credit score dropped 100 points. This sudden decrease can be very unnerving, and you may not always be able to think of a possible reason for the drop. However, it’s vital that you pinpoint the reasons behind it in order to avoid it happening again, as a fall of 100 points is significant. 

Potential reasons for such a sizeable drop could include: late or missed payments; a credit utilization rate of 100% (in other words, ‘maxed out’); or a collection account. This is when an unpaid bill, debt, or subscription suddenly appears on your credit report, and it needs to be dealt with promptly; or, better yet, avoided altogether.

Here’s How To Boost Your Score:

Whether your score is great, good, or only halfway decent, you may be keen to find ways to improve it. Here are some simple but very effective ways to send your score soaring over time.  

  • Don’t Miss Credit Repayments

Your payment history is one of the most important things lenders will check before agreeing to allow you to borrow money. As a result, it’s vital that you try not to miss any payments. 

To help you, you can set up automated payments from your bank account, or, alternatively, you can set reminders on your phone to make sure you don’t miss a bill. 

  • Don’t Apply For Too Many Credit Products

Making too many ‘hard inquiries’ into your credit history – in other words, by applying for new credit, such as a credit card or a loan –  can have a negative impact on your credit score. This impact can potentially last months or even up to two years, and could affect your ability to borrow money when you really need it. As a result, it’s important that you try and space out your applications for new credit as much as possible. The odd ‘hard inquiry’ won’t make much difference, but several in a short period of time could create the wrong impression. 

  • Try And Stick To 30%

In this case, the 30% refers to your credit utilization rate – how much of your available credit you are using at any time. This is the second most important factor that lenders will consider when you make an application, so you need to try and use no more than 30% at the most. 

In fact, if you can restrict your credit utilization to 10% or even less, so much the better – however, if this is not a realistic option for you, then 30% is the number you need to focus on. 

  • Resolve Your ‘Delinquent’ Accounts

If you have a delinquent account i.e. an old account which still has some missed payments, then it’s vital that you sort this out if you want to improve your credit score. Those unpaid debts will appear in your credit report and could make you a poor prospect for lenders. 

  • Challenge Unfair Defaults Or Errors

It’s a good idea to check your credit reports every so often so you can monitor your credit score. If you notice any sudden changes for the worse, it could be due to an error or an unfair default, in which case you should report it. Inform the credit bureau that sent you the report, as well as the company that made the error or gave the unfair default, and provide evidence that there has been a mistake.

Final Thoughts 

As you can see, a worse-than-average credit score is not the end of the world. There are a number of steps you can take to resolve issues and improve your score; it’s never too late to start aiming for very good credit.