10 Highly Practical And Effective Ways To Boost Your Credit Score.

Let's admit it; we all secretly envy those who boast of high credit scores. We always wonder why we can't seem to get it right. Having a high credit score is very important, and people whose score is above 750 rarely get turned down for a loan. This includes enjoying the lowest interest rate on the market.

Individuals who have a credit score of less than 650 know how hard it is to bag a loan, and the higher interest they have to pay on the amount they borrow. Well, it's time to do something about those low credit scores, we have compiled ten practical ways to boost your credit score. You are heartily welcome.

10. STUDY YOUR CREDIT REPORTS

This is a very fundamental step, and that is why it is the first on our list. Right before you attempt to take any action, make sure you ask for a copy of your credit report. These reports should be requested from the three central credit reporting agencies. You have access to one free report per year from each of the three national credit bureaus. When you receive the report, then you should make out time to thoroughly study it. Credit reporting bureaus have a reputation for making errors on individuals' credit reports. Hence it's essential to read your brief and try to spot any mistakes in it. In case you find any errors, report it to the credit bureau instantly. They are authorized to investigate the blunder and get back to you within 30 days. It's undeniable that errors frequently occur on credit reports.

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canva.com

According to a study, mistakes were discovered in 79 percent of credit reports. You should know that one in four of those flaws were notable enough to reduce a credit score. Errors also occur for a couple of reasons. For example, the credit bureau may include information from another individual with a similar name on your credit report. Ensure you look out for accounts you never launched, house addresses you never stayed at, a wrong Social Security number, or date of birth. All these and any other inaccurate, or neglected information.

9. ESTABLISH A GOOD RECORD OF PAYING YOUR BILLS ON TIME

This may seem like a bit of general advice, but it is crucial. A record of paying your bills right on time is the most significant factor considered when calculating your credit score. Delayed payment can adversely affect your score way more than you can imagine. You'd have to put in more effort to increase your count to balance it out. If you feel you'd be late on a payment, give the creditor a call in advance before the exact date and explain the issue. It is possible that they offer a one-time late payment pardon program, or they may decide not to relay the late payment to credit monitoring agencies within a specified period.

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canva.com

Usually, you'd be asked when you would be able to make the payment, and it is very crucial you make the payment on the agreed date. John Ganoti, founder of "CreditCardInsider.com" encourages individuals to activate automatic payments through their respective bank accounts so they wouldn't have to make payments late. He said:

"If you're serious about maintaining and maximizing your credit scores, the biggest thing you'll want to do is make sure you pay all your bills on time," he said." If you make a late payment or let an account to go to collections, that negative item on your credit reports will usually hold your credit scores down for years."

8. KNOW HOW CREDIT UTILIZATION AFFECTS YOUR CREDIT SCORE

Agencies calculate 35 percent of your credit score from your payment track record. It is reasonable to say that it is as significant as your credit utilization, which holds 30 percent of your credit score. It also tracks how much of your available credit you utilize. Creditors desire to see you maintain credit utilization under 30 percent. To clearly illustrate this; if an individual who has a credit line of $1,000, the person should be careful not to use over $300 of it. Furthermore, individuals with the highest credit score commonly have debt utilization degrees lower than 10 percent. Experts have admonished people not to allow their credit usage to be above 50 percent. Doing otherwise will drastically bring down your credit score.

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canva.com

You should know that this aspect of your credit score doesn't calculate your total debt, but the percentage of the debt you are utilizing. For example, if on your four credit cards, you have $250 with $1,000 credit limits on each, you may consider closing three out of the four accounts. This decision to transfer the balances to just one account may seem like an excellent financial step. However, this would severely affect your credit score, as you have only moved from using 25 percent to 100 percent of your available credit even if you haven't added to your debt total.  Also, one more word of caution from Ganotis:

"Generally, the closer your utilization is to 1 percent, the better it is for your credit scores, as long as it's not 0 percent."

7. TRY USING YOUR CREDIT CARDS THE SAME WAY YOU USE YOUR DEBIT CARDS

Some individuals would love to maintain a low debt balance, but not like to hit the zero mark. There is something wrong with this because balances on credit cards attract imposed interests except you pay them monthly. A private financial expert at "TopCashback.com" in Montclair, N.J -Natasha Rachel Smith encourages you to use your credit card in a similar way you use your debit card attached to your current account. She noted:

"One of the best ways to get your credit score up is by making all your purchases on your credit card but never exceeding how much you have on your debit card. The reason being you can repay any debt you accumulated through your credit card without accruing any unnecessary interest and keeping your credit utilization ratio low."

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canva.com

Here's another point you should hold dear, if your card gives you points, you'll pile up the points without attracting interest. In simple words, you can make multiple purchases on your credit card, but be careful not to use more than what is in your debit card. You can pay back any debt you assembled through your credit card without garnering additional interest and retaining a low credit utilization ratio 

6. GET NEW CREDIT CARDS 

To increase your credit score, we learned something new from Lou Haverty of the "FirtClassTravelGuide.com." According to Haverty, when he wanted to boost his credit score, he opened new credit card accounts and ensured he never used them. You are probably wondering how this worked out for him. Well, it did because following on-time repayment record, credit utilization is the next factor used to estimate your credit score. Credit scoring agencies like to ensure that you don't empty your credit cards, even though you could. They use 30 percent as the standard you should attain.

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canva.com

For example, if you own a credit limit of $1,000, you shouldn't have a balance of over $300. A clear way to attain a beneficial credit utilization level is to clear the amount to get below the 30 percent verge. However, improving your credit limit properly would achieve a  similar result.

Harvety noted:

"If you have a low credit utilization score, that will have shortest term improvement in your score as long as you don't miss a payment or do something that offsets the benefit from a low utilization ratio. I've seen it first hand with the improvement in my own score when I've opened new credit cards over the last year. The problem is that it's really only a good strategy for someone disciplined not to abuse the extra credit line."

5. MAKE MULTIPLE CARD PAYMENT MONTHLY

Your credit score may soar higher if you endeavor to pay more than one payment monthly.  This can help you in two significant ways; it aids you in making late payments that negatively affect your credit score. Also, it keeps your credit utilization above 0 percent without attracting interests on balances. Some individuals conclude that if they pay off their balance monthly, their credit report will display a zero balance. Sadly, this isn't true, as your credit history will highlight the current balance on the day the credit card agency relays the information to the credit bureau. You have no power over the period in the billing cycle in which this action will be affected.

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canva.com

For all you know, it could be a day before you make the payment in full or a day after or a period in between the days. The suggestion to make more than one payment monthly was given by Smith, who advised that you should use your credit card just the same way as your debit card.

Smith added:

"You can avoid paying high interest on your credit card purchases by paying down debt as soon as possible. If you're able to get in the habit of repaying the balance each week, this is a strong and almost-secret trick to improve your credit score."

4. GET HITCHED TO SOMEONE WITH A GREAT CREDIT SCORE 

This is off for married individuals, but very valid for unmarried ones. Okay, this isn't us telling you to make your marital choice based on money. However, we want you to know how this could boost your credit score. If your partner, a friend or family member has a fantastic credit score and has no problem in making you an approved user on one of their accounts.

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canva.com

You would see a notable increase in your credit score. A private finance specialist who works with "Offers.com." --Carson Yarbrough drives home our point:

"There aren't many shortcuts in credit building, but this is one of them. If someone you trust has a well-maintained card that has a long, flawless payment history, they can help you out big-time by adding you to that account as an authorized user. Once you're added, that account will show up on your credit reports. And as long as the account remains in good standing, you (and your score) will get credit for it as the data from your credit reports feeds into your credit score."

As emphasized by Yarbrough, this is one shortcut to credit building you can utilize to boost your credit score. 

3. BE AWARE OF ALL YOUR CREDIT SCORES

This is one thing many people are ignorant of. No, you do not have just one credit score. The truth is, you have a score at each of the three national credit reporting bureaus. Furthermore, how potential lenders make use of those credit scores can differ based on the type of loan you are bidding for. With this reason, it's smart to analyze and trail several elements of your comprehensive credit score statements.

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canva.com

Ganotis relates how it's essential to know that you can have different credit scores, and how data on each credit report can vary:

"I talk to many people who mistakenly think they only have one credit score, when one person can actually have dozens of different credit scores. Even under the FICO brand, there are several different models used for different purposes, like for considering a mortgage application versus a credit card application."

Ganotis also adds that, 

"each score can be calculated using information from one of your three credit reports. Since information can vary from one credit report to the next, the same type of score calculated from each can vary, too."

Now that you know you can have dozens of distinct credit scores, it's time to promise yourself that you will always make an effort to get all your credit scores and examine them.

2. REFRAIN FROM CLOSING CREDIT CARDS ACCOUNTS THAT HAVE BEEN PAID OFF

To increase their debt score, some people believe in closing a credit card account the moment it is balanced. They are convinced that since the account has been closed, they won't be lured to take it up again and get a new chunk of credit card debt. Even though it seems reasonable, it's a mistake. Thanks to Smith, we know now that closing accounts can cause a significant blow on your credit score. Do not get confused; there is a reason for this.

Read More: Mind-Blowing Images Of What Historical Figures Actually Looked Like

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The availability of your current access influences credit companies, whether to regard borrowers as being accountable or not. Hence, going beyond 30 percent at any stage in a billing cycle could adversely affect your credit score. 

Smith stated:

"While it is tempting to say goodbye to a card forever, it's in your best interest to keep it. I also recommend keeping the credit card you've held the longest to minimize any additional damage to your credit score since the length of holding a credit item plays a role in credit scoring as well. The longer your relationship with a provider, the better you're viewed."

So, in case you are planning to bid that card farewell, remember how it can significantly be of help to you and hold it tight --keep the account open.

1. CREDIT BUILDER LOANS CAN WORK MAGIC

Credit builder loans are loans commonly made available by small financial institutions. These institutions include credit unions and community banks. The amount borrowed is secured by the money in your account with the credit union or community bank. And you cannot have access to the account unless the loan is paid off. Usually, the loans have brief repayment periods ranging from six to twelve months. So, when you are done paying off the loan, you receive the money from the account.

Read More: Unique Retro Photos That Show How Awesome People Were Back In The Day

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canva.com

Importantly, the three credit bureaus receive reports of these payments. This means you can use it as a means to boost your credit score. If you make those payments at the actual time, you will build a reputation for a positive payment track record. A good payment history, for example, determines 35% of your FICO credit scores. However, if you make late payments, it will also be reported, and it can significantly reduce your credit score. In case you are not eligible to apply for credit union membership, you can regularly obtain credit card accounts that operate similarly.

A major example is "Discover It" gives customers access to cards that can be received anywhere "Discover" is welcomed. However, the credit line of the card is guaranteed by the deposit you make into the account. "Discover" returns your deposit to you after eight on-time payments, and your account is regarded as "unsecured."

We are sure you'd be able to adopt many, if not all of the recommended ways we have made available on our list. It's time to take action and improve those scores. However, remember it will take time and would require discipline from you. We know you got this! Everyone deserves a chance to improve their credit scores, so be a great friend and share it with everyone you love.

Source: WorkandMoney

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