As you prepare to take out a new loan or mortgage, you will be thinking about your credit score. The higher your credit score is, the better your interest rate on the loan will be. This is important as a lower interest rate means saving yourself a significant amount of money over the life of the loan. To increase your credit score fast, here are 5 of the best steps to take.
Five Ways to Increase Credit Score
1. Check Your Credit Reports
Your first step in this process will be to pull your own credit report and check what is being reported. This will tell you whether you need to make some improvements or fix some errors. If there are negative reporting errors, having these taken care of will increase your credit score.
Remember, there are three major credit reporting agencies, and each has their own credit report. You can get one free report from each agency per year through AnnualCreditReport.com.
2. Pay Down Your Debt
If you can do it, making a larger than normal payment on your debt is a great way to increase your credit score. The lower the percentage of debt to available credit (called credit utilization), the better. If you can bring your percentage of debt to less than 10% of your available credit, you will ensure the best possible credit score.
3. Keep Your Accounts Open
If you are looking to raise your credit score, it is best to pay off a credit card but keep the account open. Your history with credit cards is extremely valuable, and the longer your history, the better your credit score will be.
Another reason to keep your accounts open is to maintain your line of credit and keep the overall credit utilization low. When you close your account, your credit score gets hit twice — so be careful!
4. Contact Your Creditors
If you have been a good customer but have one or two late payments on your record, it might be worth the time to contact that creditor and ask them to review your account and remove what is reporting as negative. If you happen to have a balance on that account at the time, it may help your case.
5. Avoid Credit Inquiries
Each time a bank or credit lender looks at your credit report, it leaves a mark. Too many inquiries in a short period of time could indicate a financial problem, and that will affect your credit score. If you are hoping to take out a mortgage in the next few months, do not open any new credit cards or other loans.
It is imperative to remember that the most important thing you can do to maintain a high credit score is to pay your bills on time, every month. Nothing will decrease your score faster than missing payments. Increasing your score is possible within just a couple of months. You should see improvements within 60 days by following these steps.
Jessica (aka, The Debt Princess) is a writer at Everything Finance. Everything Finance is a site about just that, everything related to finance. You can get information about investing, saving money, shopping, blogging, and making money online. If you like what you see here, make sure to stop by or better yet subscribe to our feed so you don’t miss a thing.