Having a good credit score is important if you want to be viewed by lenders as a candidate for home loans, car loans and additional credit cards. Ideally, you will want your credit score to be 720 or higher. If you currently have a low credit score, you can take some important steps to raise your score over time.
If you are new to using credit cards and do not yet have a score, you may wish to use a credit card comparison service in order to determine which card is a good first choice.
Increasing Your Credit Score
Raising your credit score will not happen overnight, but the following tips will point you in the right direction toward securing loans and additional credit.
Be conservative about using credit cards, but make sure that you do use them on occasion. One of the factors for determining your credit score is your ability to use credit responsibly without exceeding your limits. If you establish this pattern, you should see your score increase.
Start making the effort to pay your bills on time or ahead of time. The easiest way to have your credit score lowered is to fall behind on your monthly payments. You will be penalized with owing interest. Plan to at least pay off your minimum balances each month and try to pay more if you are able.
Pay off any outstanding debts as quickly as possible. If you already owe money to your creditors, establish a financial plan for settling your debts. Once you are no longer in debt, you can begin working to raise your score through using credit responsibly.
Diversify your existing credit, but also take care to establish a good relationship with specific lenders. Both of these factors are evaluated when one’s credit score is determined.
Apply for additional lines of credit once you have paid off your debts. This tip will not work for people who are already in debt, as your score will only be lowered further.
Establishing A Credit Score
Those who do not yet have a credit history are in a position to establish a reputation as a good credit risk. Start working toward a good credit score as early as possible with these useful pointers.
Apply for a credit building credit card first. Although these types of cards have a high APR, they are useful for people who quickly wish to establish a pattern for paying their debts in a timely manner.
Do not use all of your available credit and be certain to pay your bills on time. This is a pattern that you will always need to maintain when using credit.
Move on to mid-market credit cards after one year. After you demonstrate your ability to pay off a high APR card, you can close that account and apply for mid-market cards. Use these responsibly and your credit score will put you in a good position to start securing auto loans or home loans.