6 Simple Ways to Improve Your Credit

Do you wish your credit score was better? If so, you aren’t alone. According to Experian, the average credit score in Indiana is 699. This puts many Indianan’s in the “good” category. And while this isn’t an awful score, people in the “very good” and “excellent” categories might get better interest rates – saving them money. Credit scores are 3-digit numbers that decide our financial fate; they have power.

Ready to see your score rise? It might take some new habits and planning. But you can do it! Forgive your mistakes, learn from them, and move on. Yes, improving your credit takes time, but it is possible. In fact, you can improve your score in just a few months by doing things like paying down debt and paying bills on time. Even extremely low scores from bankruptcy or several bad marks can improve. There is hope!

The first step to raising your credit is by understanding how it works. To summarize, there are companies like FICO and Experian that calculate your score. Your score will likely look a little different between companies. Almost all scores use the following into consideration:

• Your payment history: Do you pay on time?
• Credit age: How old is your oldest line of credit?
• Hard inquires: How many times has your credit been checked by a lender in recent weeks?

These, and other factors, indicate to the credit companies what kind of consumer you are; this determines your score.

To improve your score, know your score. Companies like Credit Karma allow you to check your score for free whenever you want. They also have tools like alerts, which emails you when there is a change, good or bad. When you monitor your credit, it reminds you of your goals. It also helps to make sure the information is accurate. Websites like these show you which factors are affecting your scores, like late payments. Many of them explain the criteria with helpful blogs and information.

Below are 6 simple ways to improve your credit:

1. Pay your bills on time: One of the most impactful criteria in a credit score is late payments. If you miss a payment on something like a car loan, the bank might report this missed payment to the credit agencies. Unfortunately, several missed payments will indicate you aren’t a reliable borrower. This is why it impacts your score. When potential lenders review your credit, they want to be sure you are going to pay them back. If you made mistakes with forgetting to pay bills in the past, be sure to set up auto-payments or alarms. Always make your payments before or on their due dates going forward. Don’t worry! Your past missteps will affect your score less with time, and at some point, will fall off your report completely.
2. Make frequent payments: Owing large amounts negatively impacts your utilization ratio (how much you owe vs. your credit limit). If you made a larger purchase on your credit card to get rewards or if there was an emergency, do your best to pay down that card. You can make weekly payments to help reduce the card debt. Plus, credit cards usually have a higher APR than other loans, so make sure to pay them off monthly.
3. Keep older accounts: Make sure to keep older credit cards open, even if they aren’t being used. This helps your credit age and shows lenders that you have a long established history of spending and paying responsibly.
4. Experian Boost: For some individuals, Experian Boost helps to increase their credit score. This product is great if you have a utility bill or phone bill that you pay on time. It allows you to add this bill into your credit score, thus giving your score a little ‘boost’. Try it out by visiting experian.com/boost. You do have to register for an Experian membership.
5. Pay off your debt: As mentioned earlier, the credit utilization ratio is important in the way your score is calculated. A good rule of thumb is to have your available credit at 30% usage or less. You can pay off your debts faster by small sacrifices like packing your lunch for work or buying used items instead of new. Put the money you would have spent right into that debt!
6. Apply for a new credit card through a local bank: If you are just starting out and don’t have much credit, open a new account and make on time payments. However, don’t open too many accounts or charge things you can’t pay off at the end of the month. Credit cards used responsibly can help your credit grow; just be mindful of all purchases. You also don’t want too many hard inquiries, so give it a lot of thought before applying for a new card. If you are ready for your new card, Porter Bank is a local bank you can trust. Check out their credit cards by clicking HERE.

How do you get your score to increase fast? Unfortunately, if you already have negative marks on your credit report, there is no magic potion to fix it instantly. The good news is that with better spending and payment habits, your score should improve with each passing month. Although delinquencies can remain on your report for 5-7 years, they will have less of an impact the older they are. They eventually fall off. Even bankruptcies fall off with time.

Did you find this article helpful? If so, please share this article with friends and family. Also, don’t forget to check out Porter Bank – friendly banking built on trust.