The credit score is a reflection of your creditworthiness and your financial standing. Having a bad credit score can result in lots of issues like denial of loans and other credit, high interest rates, difficulties in finding a job, etc. It is therefore important to have a good credit score.
It is not very easy to improve the credit score within 6 months, but dutifully following the below listed steps can go a long way in improving your credit score in 6 months.
- One of the most fundamental steps towards getting a good credit score is paying your credit card bills on time. It may be noted that besides credit cards, the bureaus also look into other financial activities that get reported. Hence, it is important to make timely repayments of other credit and loans as well.
- In case you cannot pay the bill in full, you should pay at least the minimum amount payable on the due date. Timely payment accounts for 35 percent of the credit score.
- A good way to pay off credit card debt is to slowly reduce the remaining balance every month on all of the cards. You may repay $50 to $100 on each card. Try to prioritize the cards with the highest interest rates. Such a strategic payment plan will not only help slowly improve the credit score, but will also help clear out the debt that you have accumulated.
- Get your credit report and peruse it thoroughly. If you detect any errors, then you should dispute it with the bureaus and have them correct it. Even a minor increase in the credit score can be a big boost to your creditworthiness.
- Check the length of your credit history. You may check all your open accounts, verify the duration of these accounts, and close the unwanted recent accounts. If the account has been open for a long duration, then do not close it, as an old account with a good credit history helps improve the credit score.
- Review all your open accounts and rebalance it in such a manner that it is diverse and consumer credit accounts like store cards, credit cards, and store lines of credit, etc., are limited to a minimal essential number. A good balance of student loan, car loan, mortgage, and consumer loan in the credit portfolio improves the credit score.
- A hard inquiry refers to the act of your credit card being pulled for inspection by a lender. It is often done whenever you apply for a new line of credit. It can adversely impact the credit score. Hence, do not apply for new store cards, credit cards, etc., if not really needed.
- A low credit utilization ratio of below 30 percent can boost the credit score. The ratio refers the total outstanding on all financial activity as a percentage to the combined credit limits on all financial activities.
- You may talk to your lenders like your credit card company and get your credit limit increased. Besides repayment of debt, this is one of the ways to lower the credit utilization ratio.
- Talk and get yourself added to the lines of credit of a family member or a friend’s with good credit history. You should not use their line of credit for purchases or anything. Just being associated with someone with good credit can help improve your credit score.