Here are the 7 steps I took to go from a mediocre credit score in the 600s to an impressive 800!
Step 1: Check your credit report and score
The first step to improving your credit score is to know where you stand. You can check your credit report and score for free through websites like Credit Karma or Annual Credit Report. These websites allow you to see your credit history and identify any errors or discrepancies that might be dragging down your score. And let me tell you, mistakes on credit reports happen more often than you think. I once had a credit card on my report that I never even applied for! So it's important to check and dispute any errors you see.
Step 2: Pay your bills on time
Paying your bills on time is like the golden rule of credit scores. Late payments can have a major impact on your score, so it's important to make sure you pay all of your bills on time, every time. Now, I know life gets busy and it's easy to forget a payment here and there, but there are ways to make it easier. You can set up automatic payments for your bills, or even set reminders on your phone. Just make sure you have enough money in your account to cover the payments.
Step 3: Keep your credit utilization low
Your credit utilization refers to the amount of credit you're using compared to your credit limit. For example, if you have a credit card with a $1,000 limit and you're using $500 of it, your credit utilization is 50%. Now, I'm not saying you can't use your credit cards, but it's important to keep your utilization low to show lenders that you're able to manage your credit responsibly. It's generally recommended to keep your credit utilization below 30%.
Step 4: Don't open too many credit cards at once
Opening too many credit cards in a short period of time can be a red flag to lenders and hurt your credit score. This is because it can signal to lenders that you might be taking on more debt than you can handle. Instead, if you need to open a new credit card, try to space them out over time and only open accounts when you really need them.
Step 5: Use a mix of credit types
Having a mix of credit types, such as a mortgage, car loan, and credit card, can also help improve your credit score. This is because it shows lenders that you're able to manage different types of credit responsibly. Just remember, taking on too much debt can still negatively impact your score, regardless of the type of credit.
Step 6: Stop closing your credit cards
Closing credit cards might seem like a good idea if you're trying to reduce your debt management, but it can actually have a negative impact on your credit score. This is because it can lower your credit utilization and shorten your credit history, both of which are factors in determining your credit score. Instead, if you do need to close a credit account, make sure it's for a good reason and do it carefully. Or, you can buy a random boba each month on old credit cards to keep the account active, which is what I do.
Step 7: Monitor your credit regularly
The next step to improving your credit score is to monitor it regularly. You should check your credit report and score at least once a year to make sure everything is accurate and up-to-date. You can also set up alerts through credit monitoring services to notify you of any changes to your credit report. This can help you catch any potential issues early on and take action to resolve them.
Now, you might be wondering why having a good credit score is so important. Well, let me tell you, having a good credit score can open doors for you that you never even knew existed. It can help you get approved for a mortgage or car loan, and it can even affect your insurance premiums and job prospects. So trust me, it's worth putting in the effort to improve your credit score.
So, those are the 7 steps I took to improve my credit score from a low 600 to an impressive 800. It wasn't always easy, but it was definitely worth it.
Have a wonderful day!
Steve 😀
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