Get the best credit score possible

The importance of credit scores

The following post has been contributed and provides an overview of credit scores and why they are relevant. Please note that the following post may contain affiliate links:

These days, our credit scores factor into our lives more than ever. Whether you’re taking out a mortgage, applying for a business loan, or just buying something on finance, your credit score will be considered. If yours is looking a little worse for wear, all is not lost! There are a range of steps and habits you can use to improve your credit score. Here are just a few.

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Credit card utilisation ratio

First of all, start keeping an eye on your credit card balances. The revolving credit you have, stacked up against the amount you’re actually using, can have a big impact on your credit score. The smaller the percentage, the better your credit will look. You should be aiming for 30% or lower. It may take some time, but set out a plan for paying down your balances, and then keeping them at a low, healthy level. You may not know that you can be stuck with a high utilisation ratio, even if you pay your balances off every month. This is due to card issuers use your statement balance for reports to the bureau. If your issuer will accept multiple payments through the month, I suggest you use them!

Destroying your debt

After you’ve got a better handle on your credit card balances, try your best to eliminate them completely. This is perhaps the most effective and straightforward way you can improve your credit score. Like many people, you might have a number of active credit cards at the moment. There are many factors which dictate your credit score. One of them is the number of cards which have balances. If you’re switching cards around for purchases all the time, it can really lower your credit score. The solution is simple. Gather all your credit card documents together, and pay off all your smaller balances. After that, try to get into the habit of using as few cards as possible. You won’t see a change overnight, but in the long run this will help you out a lot.

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Some debt isn't such a bad thing

Finally, don’t go crazy wiping off debt from your report. Some people think that all debt is inherently detrimental to your credit score. Believe it or not, there is such a thing as good debt. This is any debt which you’ve paid off as per the agreement, and handled well. Some people spend hours arguing on the phone trying to get debt wiped, only to end up hurting their score! Obviously, if there are bad items on your credit report, you need to make sure they’re removed. The Fair Credit Reporting Act allows you to have full access to your report. You may notice accounts which were paid off a long time ago, or other harmful blemishes. Inaccuracies can be corrected through a quick phone call. Other bad items will disappear over a number of years.

There you have three of the best ways to improve your credit score. I know a bad score can feel like a weight you can’t drop, but almost everyone’s can be improved through smart moves.

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