When you apply for a loan, your credit score helps lenders decide how likely it is that they will get paid back. A credit score is based on information and formulas that help financial institutions make lending decisions. The higher your score, the better your chances are to obtain the loan. Here are some ways to improve your credit score.
- Sounds obvious, but first, make sure you pay all of your bills promptly.
- Try to keep credit card balances low and manage them responsibly. High debt will lower your score.
- Don’t open credit cards you don’t need. Opening a lot of credit accounts in a short time will lower your score.
- Don’t cancel a card when you pay off the balance. Your credit score increases the longer you’ve been with a creditor and have been paying on time.
- Check your credit report periodically for accuracy. If you find something wrong, contact both the credit reporting company and the company that provided the information to get things corrected.
Use these tips and over time you’ll be well on your way to developing a solid credit history.