Ways For Boosting Credit Score
Because of the way credit scores are calculated, some
actions you take will affect your credit score better than
others. In general, paying your bills on time and meeting
your financial responsibilities will boost your score the
most. Owing a reasonable amount of money and being able
to repay it will show lenders that you take your finances
seriously and pose little threat of lost money. There are
a few tips that, more than any other, will boost your credit
score the most:
Tip # 4: Pay Your Bills On Time
One of the best ways to improve your credit score is simply
to pay your bills on time. This is absurdly simple but it
works very well, because nothing shows lenders that you take
debts seriously as much as a history of paying promptly.
Every lender wants to be paid in full and on time.
If you pay all your bills on time then the odds are good
that you will make the payments on a new debt on time, too, and
that is certainly something every lender wants to see. Experts
think that up to 35% of your credit score is based on your
paying of bills on time, so this simple step is one of the
easiest ways to boost your credit score.
Paying your bills on time also ensures that you don’t get
hit with late fees and other financial penalties that make
paying your bills off harder. Paying your bills in a timely way
makes it easier to keep making payments on time.
Of course, if you have had problems making your payments on
time in the past, your current credit score will reflect
this. It will take a number of months of repaying your
bills on time to improve your credit score again, but the
effort will be well worth it when your credit risk rating
Tip #5: Avoid Excessive Credit
If you have many lines of credit or several huge debts, you
make a worse credit risk because you are close to
“overextending your credit.” This simply means that you
may be taking on more credit than you can comfortably pay
off. Even if you are making payments regularly now on
existing bills, lenders know that you will have a harder time
paying off your bills if your debt load grows too
The higher your debts the greater your monthly debt payments
and so the higher the risk that you will eventually be able to
repay your debts. Plus, statistical studies have shown
that those with high debt loads have the hardest time
financially when faced with a crisis such as a divorce,
unemployment, or sudden illness.
Lenders (and credit bureaus who calculate your credit score)
know that the more debt you have the greater problems you will
have in case you do run into a life crisis.
In order to have a great credit score, avoid taking out
excessive credit. You should stick to one or two credit
cards and one or two other major debts (car loan, mortgage) in
order to have the best credit rating. Do not apply for
every new credit line or credit card “just in case.”
Borrow only when you need it and make sure to make payments on
your debts on time.
You should also know that taking out lots of new credit
accounts in a relatively short period of time will cause your
credit score to nosedive because it will look as though you are
being financially irresponsible.