If you wish to raise your credit
score, you’re in the ideal location. There are a whole lot of ways that you can enhance your
credit rating – and there are a couple of practices and techniques you may not be aware of! Therefore, in this guide, we’ll take you through a couple of top little-known
suggestions which could help you enhance your credit rating in 2020. Continue reading and get all the
information!
1. ) Entirely Pay off your Credit Cards Each Month
If at all possible, you should
always pay your credit cards in full each month – instead of making minimum
payments on your credit cards. Why? Well, the most obvious advantage is that
you’ll spend less on interest. Should you pay your credit cards every month in total,
you won’t pay a dime in interest – and that’s money you can save for different purposes!
But beyond this, paying your
credit cards entirely has an advantage for your credit rating, also. It reduces
your “credit utilization,” that is a large element in your credit rating .
Basically, if you have a $10,000 credit card limit, and you have $5,000 of credit
card debt, your credit utilization is 50%.
But if you have a $10,000 limit
and pay your cards off in full every month, your utilization rate is 0% – and
lower is always better when it comes to credit utilization. A low credit
utilization rate means that you’re consistently paying your debts down on time
and can help boost your credit score!
2. ) Set up Automatic Payments for All of Your Bills
Another major factor in your
credit score is on-time payments. According
to consumer credit company FICO, a single
30-day missed payment could drop your score by up 100 points or more.
So how can you eliminate the risk
of late payments? We recommend setting up automatic payments for all of your
bills – from health insurance to car insurance, rent or mortgage payments,
credit cards, utilities, and any installment title loans or short-term loans you may
have.
If your payments are automatically
taken from your account every month, you’ll never have to worry about a late
payment again – and you can boost your credit score!
3.
Never Close Down Unused Credit Cards
If you pay off a credit card, you
may be tempted to close the account, particularly when you don’t plan on using it
again. But this is a mistake. The length that your credit accounts have been
open is a major factor in your credit score.
For example, if you’ve got two
charge cards – one that you opened 3 years ago, and one that you opened 7 years
ago, the average length that they’ve been open is 5 years. But if you close the
7-year-old account, the average length drops to 3 years – which can negatively
affect your credit score.
So instead, don’t close the account – as long as it does not have an annual
fee, you can use it to make an occasional purchase and then pay it off right
away. This will help boost your credit score as the length of your open
accounts continues to increase.
4.
Enhance Your Credit MIX with Different Types of Loans
If you only have one type of loan
or credit card, you may have a bad “credit mix.” This term refers to the
different types of loans that you’ve got now and have had in the past.
For example, a good credit mix may
include two credit cards, a mortgage, a personal loan, and a car loan. There’s
a good variety of different loans in this mix, so you will have a higher score.
In contrast, in case you only have a
single student loan and no other credit, your score may be lesser, since you
have not shown your ability to take out and repay different types of debt.
If you need to improve your credit
score, taking out an auto loan, short term loans for a home improvement
project, or other types of instalment loans will be a good option.
However, you should never take out
a loan unless you need it, so don’t just take loans to try to build your credit
score. Make sure you’re making a good financial decision before you decide to
borrow money.
5.
Check Your Credit Report for Inaccuracies & Errors
You can request a copy of your
credit report for free each year from Annual Credit Report. You should always
check your credit report and see if there are any inaccuracies – such as late
payments that you actually made on time – and submit a request for correction.
If you manage to find any issues,
correcting inaccuracies and errors on your credit report is a great way to
quickly increase your credit rating.
Follow
These Tips to Enhance Your Credit Score in 2020
With these simple steps, you can
improve your credit rating and qualify for better rates on loans and credit
cards in 2020 and beyond. So, take another look at these tips now, and think
about how you do use them to boost your credit rating now.
