Tips to Improve Your Credit Score
It is not unusual for someone to go through a rough time now and then, and to, because of this have to work to improve their credit score. But how can you go about doing so? What if you are trying to purchase a house? Or have another major purchase coming up that involves needing to borrow credit? Bad credit can be a heavy weight on your shoulders, and make your life incredibly more difficult.
Become an Authorized User
A family member or significant other may be willing to add you as an authorized user on his or her card. As an authorized user, you’ll enjoy access to a credit card and you’ll build a credit history, but you are not legally obligated to pay for your charges.
Ask the primary cardholder to find out whether the card issuer reports authorized user activity to the credit bureaus. That activity generally is reported, but you will want to make sure — otherwise, your credit-building efforts may be wasted.
You should come to an agreement on how you’ll use the card before you’re added as an authorized user. If the primary cardholder expects you to pay your share, make sure you do so even though you aren’t legally obligated.
Keep Accounts Open
Keep accounts open for as long as possible. Unless one of your unused cards has an annual fee, you should keep them all open and active for the sake of your length of payment history and credit utilization.
Consider Applying for a Credit-Builder Loan
A credit-builder loan is exactly what it sounds like — its sole purpose is to help people build credit.
Typically, the money you borrow is held by the lender in an account and not released to you until the loan is repaid. It’s a forced savings program of sorts, and your payments are reported to credit bureaus. These loans are most often offered by credit unions or community banks; at least one lender offers them online.
Make Your Payments on Time
Make all of your of your payments on time – and in full – not only with credit accounts but also with other accounts, such as utility bills. Bills that go unpaid may be sold to a collection agency, which will seriously hurt your credit.
Use Your Rent to Improve Your Credit Score
Using services such as Rental Kharma and RentTrack allow you to take a bill you are already paying and put it on your credit report, helping to build a positive history of on-time payments. Not every credit score takes these payments into account, however some do, and that may be enough to get that much-needed loan or credit card that firmly establishes your credit history for all lenders.
Keep Your Credit Card Balance Below the Limit
Utilization is your balance when compared to your limit. It is recommended that you keep paying your balance off in full each month, however, if do you carry a balance don’t let it exceed 30% of your credit limit.