When pursuing financial freedom, your credit score matters. An excellent credit score can unlock the door to better interest rates and insurance premiums. Both of which will save you money. But on top of that, a high credit score can help you secure the home of your dreams. Because good credit is such a crucial part of your financial future, it’s best to set the bar high. Here are three reliable ways to raise your credit score.
1. Keep Your Card Balances Low
Your overall credit balance, better known as credit utilization, can make a big impact on your score. Because of this, it’s extremely helpful to keep your balances at, or below, 10%. Your credit utilization percentage is calculated by dividing your total balance by the card’s credit limit. Then, take your answer and multiply it by 100 to get the final percentage. By keeping this number low, you can raise your score. So, identify any cards that need to be paid down and make a plan.
2. Check Your Credit Often
Because your credit score and report can change monthly, it’s vital that you keep a close eye on both. If you use a credit monitoring app, like Credit Karma or Credit Sesame, you will be able to review each element that affects your score. This not only allows you to make any necessary adjustments in how you are managing your finances but will also notify you of irregularities that pop up on your report. Many apps even offer guidance on how to raise your credit, while also explaining the breakdown of your current score.
3. Make Timely Payments
Your payment history holds the most weight when it comes to the calculation of your credit score. As much of 35% of your total score is determined by your ability to pay on time. To make the most of this factor, it’s extremely important that you refrain from missing your monthly payments. Lenders usually don’t report a missed or late payment until 30 days after its due date. Consequently, if you realize you forgot a payment, send it in as soon as you can. By consistently making on-time payments, you can raise your score.
It’s never too late to improve your credit. By focusing on these three areas, you’ll be able to raise your score quickly. With a little discipline and planning, you’ll be on the road to financial freedom in no time!
