It can be quite overwhelming to have a poor credit score because the chances of securing a loan with better terms are slim. The good news is that you can improve your credit score by taking some crucial steps. These include opening an account that reports to a credit bureau, paying your bill on time, and maintaining low balances.
But it can sometimes be tricky to know where to start. Regardless of whether you intend to build a credit from scratch or rebuild after your score has performed poorly, it’s important to understand how you can improve your credit scores. This page discusses the best strategies to improve your credit score.
Build your credit file
Opening an account that can be reported to the main credit bureaus is a key step when it comes to building your credit file. It’s impossible to start having a good track record when you are a borrower without an account in your name. Therefore, you should consider having at least one account or more so that you can build your credit file.
These can include secured cards or credit-builder loans, especially if you have a low credit score or you are starting out. Alternatively, you can decide to be added as an authorized user on another person’s credit card, but the card needs to be used responsibly.
Avoid missing payments
Your payment history can be one of the major factors that may influence your credit scores. When you have a long history with on-time payments, it can assist you get great credit scores. You can achieve this by making sure that you avoid missing credit card or loan payments for over 29 days. Remember that payments that you make after 30 days may be reported to the credit bureau to hurt your credit score.
This is the reason why it’s necessary to set up automatic payments, especially for the minimum amounts that are due. In this way, you can avoid missing a payment. Ideally, when you take care not to overdraft a bank account, you can be in safe hands. Also, if you are having problems paying a bill, you should get in touch with the credit card issuer quickly so that you can discuss your hardship options.
It’s always a good idea to stay on top of your accounts that usually don’t show on your credit report. These accounts include subscription services and gym membership. While the on-time payment may not affect your credit, it can lead to a dip in scores if it’s sent to collections.
Above all, if you see that you are behind on the bills, you should always try to bring them current. It’s worth noting that a late payment can be on your credit report for a couple of years, but it can be good for the scores if your accounts are current. Further, it can stop more late payments from being included in your credit history.