Quick Tips to Start Improving Your Credit Right Now!

Credit history is practically everyone’s second fingerprint. Just as it’s essential to carry documents to verify your identity, individuals must present their credit score. 

A credit score assesses your financial behavior and indicates how much financing you could obtain for a major purchase like a home or even for a credit card with multiple benefits. 

Therefore, your credit score is directly affected by your habits. Purchases, timely payments, and settlements are some of the ways to build good credit. 

In reality, you build your credit day by day through consistent practices that set you on the right path and tell your story. Check out some of our tips to make this process easier. 

How does a credit bureau work?

Before getting to the tips, let’s take a closer look at credit bureaus, the companies responsible for assessing scores. But how do they calculate these numbers? 

Credit bureaus gather information on borrowing and bill payment habits from various sources. This data is then converted into a credit score, which measures a person’s level of reliability in the market. 

Each country has its own credit agencies, such as Equifax and Experian in the U.S. and TransUnion in Canada.

A company like FICO uses data from credit agencies to determine a score based on payment history, debt load, history length, credit types, and recent inquiries. 

Tips to Improve you Credit Score

Here are some effective tips to enhance your credit score:

Become an Authorized User

This is a great option for those just starting with credit. If you have a friend or family member with an excellent score, you can ask them to add you as an authorized user.

This way, you’ll inherit some of their credit reliability, which may lead to a score boost.

Use a Secured Card

Secured cards require a deposit equivalent to the monthly credit limit. However, if you pay the bill on time, you won’t use the deposit.

Secured card companies regularly report to credit agencies, so you may see your score improve over time.

Pay Bills on Time

The most important factor in maintaining a good credit score is paying bills on time, which shows that you are well-organized with your credit.

This includes all types of payments, from recurring subscriptions to larger installments. So, don’t miss deadlines and stay current to have positive reports.

Diversify Your Types of Credit 

Credit cards, personal loans, and mortgages are different types of credit lines, and each impacts your credit reports differently.

If you have more of one than the other, consider diversifying by applying for a beneficial credit card or pre-qualifying for a personal loan.

Customize Your Credit Utilization Rate

The credit utilization rate refers to the portion of your total credit that you use each month. It’s best not to be close to the limit.

To balance this, you can request a credit limit increase, increasing the gap between your spending and your limit.

Reducing your utilization rate will likely help boost your credit score.

Pay Off Old Debts

The best way to improve your credit is to pay off old debts, no doubt. The faster you pay everything off, the quicker it impacts your score.

Prioritize paying down debts, including considering a balance transfer if you have outstanding credit card balances.

Monitor Your Credit Score

By following these steps, you’ll likely see a noticeable increase in your credit score. You can regularly check your credit report to keep track.

During these checks, you may also catch errors—if there’s any incorrect information, you can email and request a correction. 

If the data is indeed inaccurate, having it corrected by the credit agency will give you a fairer, more accurate score. 

Also, keep in mind that improving your credit is a gradual process that builds over time, so rushing to change everything at once won’t help much.

Stay on top of your credit, and watch your score steadily climb to greater heights.

Written by

Gabriel Gonçalves