Good credit limit is important. Whether you are applying for a loan or getting a credit card, you need to show good credit standing. So, if your credit score has been on the red during the last few years, now is the best time to repair the damage.
We’ve gathered here some tips to help you boost your credit score in 2016.
Review your previous credit reports for errors
The first step to raising your credit score is checking your credit report. So, get a copy of your report from the previous year(s) and go over them thoroughly. If you find some problematic items, like accounts you didn’t recognized, late payments you didn’t make, credit limits that are either too high or too low, and closed accounts listed as open, report them immediately for investigation and correction. Make sure to gather concrete evidence and make your claim in writing.
Get a new one credit card and use it very rarely
Here’s one thing you need to remember, your credit card “utilization rate” (the number of times you used your plastics) is a huge factor in credit scoring formulas. But, how is the utilization rate computed?
Let’s say, for example, you have a plastic with $10,000 limit and a balance of $5,000. This makes your utilization rate 50% – 20% higher than the recommended 30% or less utilization rate. However, by adding a new credit card with, let’s say $10,000 limit, your utilization will be slashed and reduced to 25%.
Pay frequently and pay large
Individuals with the best credit scores usually pay their balances regularly (every month), and often at the amount higher than what they are required to pay monthly so that by the time they reach the end of their credit terms, they only have a few dollars left to pay. If you can’t do that, then at least try to manage paying the minimum every of the month. Avoid late payments as much as possible.
Follow these three tips and you’re soon off to a better credit standing.