Introduction

Poor credit can cause problems in your financial life, but it doesn’t have to be permanent.

You can increasingly improve your score by paying all of your bills on time, paying off debt rather than moving it around, and regularly keeping tabs on your reports.

Pay bills on time

Paying your bills on time helps build a good credit score, especially if you’re using a credit card responsibly.

However, if you let any of your bills get past due, it can hurt your score even more than missing one payment might have in the first place.

As a result, so everything you can to avoid late payments by setting reminders for yourself or making sure that someone else is constantly reminding you to pay on time.

Pay off your debts and keep balances low on credit cards

Pay it off fast if you have credit card debt. The quicker your debt is paid, the lower your interest rate will be, and the less money you’ll end up paying over time.

If you’re already in debt and can’t pay it off immediately, see if there are any extra payments or promotional offers that will help you out of debt quicker.

Maintain low credit card and other revolving credit account balances. This information you can get on your monthly statement (usually called “Your Total Credit Limit”).

Your credit utilization ratio compares this number with how much of your available limit is being used; anything over 30% makes lenders nervous about whether or not they’d be repaid if a card was maxed out for an extended period.

Only apply for and open new credit accounts when necessary. This holds not just for building a good credit score but also for avoiding the temptation of overspending on things you don’t need.

If you’re trying to grow your credit score because you want to buy a car or house within the next few years, you don’t need to open a bunch of new accounts to get some additional points on your report.

If you’re considering buying something big in the future, try making that purchase using an existing account and then paying it off as soon as possible the best way to do this is with automatic payments from your savings account or checking account each month (you can set these up through websites like PayPal).

If you’ve decided that one day soon we’ll be moving out of our tiny studio apartment into something bigger, a house perhaps? Go ahead and sign up for a mortgage preapproval or home improvement loan application at a bank near where we’re looking.

As a short-term strategy, do not close unused credit cards

If you do, it could take up to two years for your score to recover from the hit. And there are other less risky ways of building up your score, such as paying off debt and having a good payment history with your current accounts.

If it’s been more than a year since you opened the account, or if the issuer isn’t offering any incentives (such as cashback), then closing that card may be in order. But otherwise? No need!

Don’t close credit cards in good standing: Closing an account won’t help if all of the other accounts on file with each lender have been paid on time every month since their inception.

That means lenders will stop reporting those accounts’ activity until they start missing payments again.

It also makes it next to impossible for lenders to see how responsible you’ve been over time when making decisions about whether or not they should lend money based on this information alone, so if there is any chance at all that someone might want access later down the road then keep those lines open.

Don’t close credit cards when planning future purchases: If you plan on using these products in upcoming years, then don’t close them out now so long as they’re still active and helping build positive payment history (which raises overall scores).

When thinking about whether or not something should be closed, instead look at what kind of investment return would come from keeping them open versus what kind would come from closing them right away (if any?).

Check your credit reports regularly

When you have good credit, leaving your credit reports alone may be tempting. After all, you don’t want to do anything that could potentially harm what’s already in place!

But there are a few reasons why checking your reports is essential:

It helps you keep an eye on possible identity theft or fraud. If someone has opened lines of credit in your name, you must know about this quickly so that you can report it and get a new card issued with your correct information as soon as possible.

You’ll also want to check up on mixed reviews (i.e., positive and negative ones) and incorrect information (such as wrong addresses listed).

Checking these things regularly will help ensure that everything listed on your reports is accurate. If something isn’t real, then there might be some issue with your score, which needs fixing before applying for loans or other products using this data.

You can

Significantly improve your credit score.

Paying all of your bills before the deadline, paying off debt rather than moving it around, and keeping track of your credit reports on a regular basis can all help you significantly improve your credit score?

Pay on Time

Paying bills on before the deadline is the most significant factor in determining your credit score. Late payments or payments made with a check that bounces can negatively affect many aspects of your financial life.

If you have a problem remembering to pay bills promptly, set up automatic payments through online bill pay services or schedule them with an app like Google Calendar or Apple Calendar so they’re not forgotten about.

Rather than transferring debt, pay it off.

Shifting debt from one card to another doesn’t help you improve your finances; it just means that you have more accounts that need to be paid off every month, which will also lower your credit score when those balances are reported as part of the “amount owed” category of each account’s data points.

To avoid creating more problems for yourself down the line (and potentially hurting even more aspects of what makes up a good FICO score), try paying down debt instead by applying extra money toward high-interest loans or getting help from a debt settlement company before any interest gets charged back onto old balances.

Conclusion

You might realize that building a good credit score is an impossible dream. However, this is still possible, and all you need to do is follow the steps outlined above.

You can build your credit by paying off your debts and keeping balances low on credit cards and other revolving credit accounts.