A good credit score is one of the most important financial tools in the United States. A bad credit score can be extremely detrimental, but there is hope. Here are some ways to raise your credit score.

Get Everything On The Table

The first step in building up your new credit score is to review your existing score and know all of the numbers and ratios. Credit scores are influenced by many factors, so getting a free annual score is the fastest way to know what is influencing your score. Your complete credit score can give you an idea of what you qualify for and a detailed overview of what creditors see when they look at your financial file. Getting a free credit report from Equifax®, Experian® and TransUnion®, which are the major credit bureaus, is a smart way to kickstart this process.

Woman looking at credit report
Photo Credit: Alexander Suhorucov

Pay Overdue Bills

Bills can be overwhelming, but they are a big puzzle piece for growing credit. If you have overdue bills that are not paid, the next step is to catch up on those bills as soon as possible. Communication is a big factor when it comes to clearing up bills. If you are unsure that you will pay a bill on time, contacting the lender can help you buy more time, and prevent your credit score from spiraling further down.

 

Consider A Credit Builder Account

Many financial institutions offer secured credit cards that help people build out their credit files. One form of this might be a secured credit card, and there are a variety of options to choose from. Secured credit cards work like regular credit cards. The only difference is that users put a down payment towards the account to start using the credit builder account. Do some research to find the right secured card fit for you.

Woman holding credit card
Photo Credit: Mikhail Nilov

Use Credit Strategically

When you open your credit builder, finance gurus say that it is important to sparingly use your credit. A good rule of thumb, according to experts, is to use less than 30% or lower, of your overall limit on any card. Credit experts say, the lower you use, the better. When credit bureaus track this number, it is used to calculate your score and give your file a favorable look. A quick hack to keep balances low is to pay your statement several times a month to keep your balance low.

Use Reporting Services

There are many reporting services that can boost your score. Reporting services are unique, because they can use unlikely factors to boost your score, like your phone bill payments, utility payments and even on-time rent payments. Although rent payments are not considered on every scoring model, a consistent record of  payments can still be useful when creditors view your overall file. Experian Boost is also a type of reporting tool that can scan your banking information for payments that can be reported to grow your credit, many of which include streaming-service payments. 

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