Your credit score affects a surprisingly large number of things in your life, including student loans, car loans, and even finding an apartment. So, if you have a poor credit score, then you should put in the time and effort to improve it so it does not inhibit you from making some of the big decisions in your life, like deciding where to live.
Credit scores can range from 300 to 850. Keep in mind that a score over 700 is considered good, so that should really be your goal. To obtain this goal, you need to work toward having a little bit of manageable debt. Not having any debt may mean that you may not have enough credit history to have a decent score. Having too much debt will also significantly decrease your score. Having a balance in between those two extremes is the best way to have a good score.
Some Important First Steps
The first step is always to check your credit report. Your credit report contains a summary of your financial information, and it allows you to know what kind of information that the credit reporting agencies will consider when determining your credit score. You should also keep in mind that rebuilding your credit will take some time. There is really no quick fix for increasing your credit score. It will not only take time, it will take some serious dedication on your part. For your timeline, keep in mind the following factors:
- Accounts that have gone into collections will stay on your credit report for seven years
- Most public records (like bankruptcy) will stay on your credit report for seven years, but some bankruptcies and tax liens may stay there for ten years.
- Credit inquiries remain on your credit report for two years.
Tips to Improving Your Credit Score
After checking your credit report, you should first try to correct any errors that you find. If you don’t find any errors, or after you have finished that process, use the following tips to increase your credit score.
- Minimize your outstanding debt
- Do not apply for credit needlessly
- Pay your bills on time and in full
- Do not close unused accounts: having accounts on your credit report that you have had for a long time will increase your score
- Pay off debt instead of moving it around
- Try using products aimed at increasing your credit score, like a merchant account for small businesses (visit eMerchantBroker.com for more information)
- Keep balances low on credit cards (ideally less than 30%)
- Keep in mind that any change to your credit report will affect your credit score, and one change an actually affect multiple items on your credit report
Improving your credit score is a slow process, but it isn’t impossible. Keep these tips in mind, and you will be headed in the right direction.