Lenders use your credit score to decide whether or not to let you borrow money. If you have a low credit score, you may have a hard time securing loans, signing rental leases and locking in the best auto insurance rates. To improve your credit score and avoid increasing your debt, keep in mind the following:
- Periodically check your credit score and contact credit bureaus if you spot an error. It’s not unusual for there to be mistakes.
- Pay your bills on time. If you’re having trouble making your payments, call your creditors and explain. You may be able to work out a modified payment plan.
- Keep your credit card balances low and don’t max out your credit cards. Many scoring systems evaluate the amount of debt you have compared to your credit limits.
- Prioritize paying off your debt with the highest interest rates first. It’s important to not skip the minimum payments on any other accounts though.
- Watch your credit applications. Too many inquiries in a short period of time can negatively impact your credit history.
- Do not close unused credit cards as a means of raising your credit score. Conversely, do not open new accounts just to increase your available credit. Apply for credit cards only as needed.
Remember, your credit score won’t change overnight. Develop and continue practicing better financial habits, and you’ll start to see your score increase over time.