How to increase your credit score and why it matters



With a new year often comes new financial goals. Many experts suggest that increasing your credit score can be a laudable goal to achieve.

Just as your blood pressure or cholesterol level suggests your physical health, a high credit score indicates positive financial health. A high number means your bank account is healthy.

While it can be uncomfortable to talk about it, Nerd Wallet credit card expert Sarah Rathner says getting your highest score possible should be on everyone’s minds.

“Having good or great credit literally opens so many doors in your life,” Rathner said.

The closer your credit score is to 850, the better your opportunities. 850 is the best possible credit score.

The best way to increase your credit score? Just pay your bills on time every month. It doesn’t just include your credit card bill. Even your utility bill and rent may be reflected on your credit report.

Rathner says that not only will you save money and avoid late fees, your score can drop as much as 100 points if you’re more than 30 days late paying your bills. “We say in business: ‘it takes years to have a customer and a second to lose one.’ It’s kind of like that with your credit score, it can take months to raise your score, and one late payment to get it back to where you started, ”Rathner said.

Another tactic is not to spend more than 30% of your available limit on your credit cards. For example, if you have a credit card with a limit of $ 10,000, try reducing your spending to $ 3,000 at a time. Better yet, keep your debt below 10%.

“If you have a lot of debt for the money you make, it can hurt you. Not only can this hurt you in terms of your credit score, but when you’re trying to borrow money, take out a loan to buy a car and buy a house, ”Rathner said. “Lenders look at your debt compared to your income because they want to make sure you’re not already overwhelmed before they decide to lend you more money. “

Having a credit card for an extended period can also help increase your credit score. So, if you happen to pay your card with a small limit, Rathner says not to close or cancel it. Instead, put a little monthly bill on it and pay it off.

Now Rathner understands that it can seem overwhelming and can take a while, but she says it will help in the long run. “Be patient. It may take a few months for the positive results to show up on your credit score. So stay the course. And don’t be discouraged because what you are doing makes sense and it will make your life easier,” said Rathner.

Another reason to increase your credit score could be to find a job. Some employers check your credit score when you apply.

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