When it comes to your credit score, it’s important to ensure that you’re in good standing, as a poor credit score can greatly affect your life. This is because your credit score can determine a number of things. From whether or not you will be approved of a mortgage, or if you’ll be able to take out a small loan from the bank, the results are highly dependent on your credit score.
With that said, mistakes happen, and something like a couple of bills paid past their due dates will already negatively affect your credit score. Thankfully, even though this negative credit information can stay with you for certain length of time (the length of time for which it stays on your report depends on the specific credit information), there are still things that you can do to slowly build up your credit and improve your credit score.
To help you achieve your financial goals sooner, here are five things you can do to turn your situation around and improve your credit score.
1. Make sure the information on your credit report is actually accurate
Despite the fact that Equifax and TransUnion are the two major credit bureaus in the country, even they are susceptible to making mistakes. Erroneous information on your credit report can potentially negatively affect your score enough that you’ll be quoted higher prices for a financial product or insurance. In fact, almost 1 in 4 reports will contain errors, which means it’s important to make sure that yours is up-to-date and correct.
2. Pay your bills on time
Of course, this would seem intuitive, but this may be the thing that got you into trouble in the first place. Be sure to actively check if you have any accounts that may be past due, and pay off any that are. Missed payments will unfortunately stay on your credit report for six or seven years (depending on province), but that doesn’t mean you have to add any new negative credit information to your report.
3. Avoid hitting your credit limit
Your credit utilization ratio—which is the amount of credit card balance you use in relation to your credit limit—has a major impact on your credit score. In fact, some argue that this has the largest effect on your score, and the lower this ratio is, the better it is for your credit score. For each account, try to keep balances to 30% or less of your credit limits, and if you can’t manage to do that.
4. Raise your credit limits
In raising your credit limit on one or more of your accounts, this will help bring down your credit utilization ratio, which in turn will help improve your credit score.
But, be warned: this method should only be used if you have your spending under control. It should also be noted that raising your credit limit could work against you if you have missed payments, as the issuer could see this as a sign of desperation and the beginning of a financial crisis.
5. Know your “risk factors”
Your credit report may also come with a list of factors that are affecting your credit score the most. In understanding each of those factors, you will have a much better chance of addressing them and start improving your score. Even with these factors laid out, though, make sure that you’re being patient with yourself; these changes do not happen over night, and will take some time before your improved practices will be reflected in your credit score.
Though these tips should help you improve your credit score over time, it can still be hard to navigate your own finances. Want more financial advice? urLoan can help you rebuild your credit score and regain financial health sooner through our loans.
Learn more about how urLoan can help you with loans and call us at 1-855-723-5626.