7 Tips to Improve Your Credit This Year

| Tedis Baboumian |

7 Tips to Improve Your Credit This Year

Your credit score is an important factor that can affect whether you’re able to meet your financial goals. The higher your credit score, the better opportunities you’ll have for borrowing money at the best rates. Good credit can also give you advantages in getting the apartment you want and the best insurance rates. Here are 7 tips to improve your credit this year.

  1. Pay Bills on Time

The most important thing you can do to improve your credit is to always pay your bills on time. If you have any past due payments, get them caught up. If you have previously had late payments that are still on your credit report, their impact will lessen with time as long as you pay your bills when they are due going forward.

  1. Make More Than One Payment Each Month

Paying the minimum helps you to avoid credit problems, but if you’re able to make more than one payment each month or at least pay more than the minimum amount due, that will help reduce your total debt and will also reduce the amount of interest you pay on outstanding balances.

  1. Keep Credit Utilization Low

Credit card balances should be kept as low as possible. Try to work toward paying back whatever you borrow as soon as you can, and before charging anything else. Keep your credit utilization as low as you can. Credit utilization refers to what percent of your total line you’re using. Experts usually recommend keeping your balances under 30 percent of the available amount.

  1. Keep Old Accounts Open

If you have credit cards that you’ve paid the full balance on, keep them open. This increases the total amount you have available to borrow, which can help to reduce your credit utilization. The age of your accounts is another factor in your credit score, so keeping old accounts open can be an advantage when considering the average age of your accounts.

  1. Consolidate Debt

If you have balances on multiple credit cards, it may help to improve your credit if you consolidate your debt into a single payment. This approach could mean using a single credit card with a promotional rate or taking out a debt consolidation loan.

  1. Don’t Apply for Credit You Don’t Need

Frequent offers for new credit cards can be tempting, but it can harm your credit score if you apply for too many new accounts in a short period of time. Avoid applying for credit that you don’t really need.

  1. Check Your Credit Report

Review your credit report periodically to make sure all the information on it is accurate. If one of your creditors is reporting incorrect information, it can hurt your credit score. Check that there are no late payments being reported if you haven’t been late, and check that balances are accurate. Also, look for accounts that you don’t recognize.

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