At times it can feel like your credit score rules your life. Everyone knows you need a decent score to get a credit card, or take out a car loan, or buy a house. Beyond those obvious financial ventures when a credit check is required, your credit score can be used to determine your access to many other things as well. Everything from getting a mobile phone plan to renting an apartment to getting a job could be dependent on your credit score. With all that pressure riding on your credit score, things can be very tough if your score is less than ideal.
There are a lot of reasons why you might end up with a bad credit score, and many of them are beyond your control. Job loss, health problems, or other times of financial crisis can mean bills don’t get paid and your credit score takes a serious hit. Even when you’re back on your feet financially, the fallout from a rough financial period can follow you for years on your credit report and continue to take a toll on your credit score long after the initial damage.
Despite the problems you might have on your credit report, there are things you can do to improve your score. We’ve got three smart moves you can make now to try to get your score moving in the right direction again.
1 – Get a copy of your credit report
This may seem like an obvious choice, but it’s one of the most important things you can do to improve your score. You should be entitled to a free copy of your credit report, so take advantage of that and look your report over yourself. Once you have one, it’s time to go over your report line by line. Companies and agencies who report to the credit bureaus often make mistakes, in fact, the Consumer Financial Protection Bureau says 76% of consumers report incorrect information on their credit report.
There are several things that could be incorrect on your credit report. From serious problems like identity theft which can lead to credit accounts and delinquencies which have nothing to do with you to simple reporting errors from credit cards or mortgage banks. Sometimes collections accounts are reported to the credit bureaus but never closed, even after you’ve paid. Take a close look at everything on your report and if something isn’t accurate, immediately dispute it.
2 – Make sure you pay all your bills on time
Yes, it really is that important to simply pay your bills on time. One of the fastest ways to improve your credit score is to make sure that your most recent financial history doesn’t contain any late payments. Not only will it help improve your score, but for most potential creditors it will be one of the most important indicators of your current financial health.
3 – Pay down your debt
One of the most important factors in your credit score is your overall credit utilization ratio, which basically is a calculation of how much credit you have available to you versus what percentage of that credit you’re currently using. Your credit score should go up when your credit card balances lower, because your credit utilization ratio drops.