8 Creative Ways to Improve Your Credit Score

Time your payments the right way

Everyone knows that if you want to improve your credit score, you must pay your debts on time. After all, if you don’t, the late payments will make it onto your record. And they can stay there for around eight years! That means that even a single late payment will significantly lower your credit score for years to come. And rob you of all the benefits of having excellent credit.

However, is there an easier way to ensure you always pay for things on time? Well, yes! It will take a lot of diligence, but all you need to make the job easier is to break it up into smaller chunks. You see, settling bills can seem daunting because you are mostly paying the entirety of them upfront. However, depending on the timing of your payments, it is much better to pay your bills twice or even thrice a month. Do you get paid every week or every other week? Then put part of your pay towards paying off bills immediately! Sure, it’s a ‘constant’ drain on your paychecks. But it’s still better than having to blow an entire paycheck on paying things off and then struggling to fund your everyday life.

Don’t be afraid to go for a higher credit card limit

Here’s a fun fact: low credit utilization improves your credit score immensely. In other words, the less you approach the limits of your credit card, the better. If you max out your credit card, it will seriously hurt your credit score, so it’s always best to avoid that!

So, here’s where a neat little exploit comes in. If you qualify, you can ask for your credit card limit to be increased. From here on out, you must endure the urge to adjust your monthly spending accordingly. If you can stick to the plan and refuse to use more money than you have been using up to the increase of your card limit, you are in for a straight increase to your credit score! If you can go beyond that and start spending even less, your credit score will improve.

The only real risk and fear here are that if you max out your new credit card limit, the consequences would be even worse for you than they originally would have been. So, even though this is generally considered a relatively low-risk method to improve your credit score, it can still be disastrous if you mess up.

Taking out small loans helps

Another interesting fact is that repaying loans improves your credit score. That is because it directly marks you as a reliable debtor. Everyone is eager to lend money to someone they know will repay the debt, especially when interest is involved.

However, taking on large debts to improve your credit score is unwise. It can easily backfire on you and cause far more harm than good. So, this leaves us with the following method: take out a small loan and then stick to a regular repayment schedule. Even though they are relatively low-worth loans, they will hurt your credit score a little. But, as you continue to pay them off, you’ll notice your credit score jump up instead!

That is also extremely useful since you sometimes need a lump sum of cash for a car refurbishment or a home renovation project. But, it would be hard to secure the funds without almost maxing out your credit card if you don’t have a lot of free cash every month. These smaller loans let you tackle some problems much more efficiently, and they’re a fantastic way to generate long-term credit score improvement! The experts from brooklynmoversnewyork.com also suggest this as a decent solution for people who struggle with all the costs associated with moving to a new home.

The importance of credit cards

On the subject of credit cards, they are, simply by existing, an essential part of credit score improvement. That is because part of your credit score is the age of your accounts. People with old bank and credit accounts are seen as more reliable, reflected in their credit scores.

That is unfair to young adults and working professionals just starting to get into finances. Furthermore, there is a possible way out! All you have to do is get an account or a credit card as early as possible. Even if you do nothing with them past letting some money sit there, their aging is constantly helping you.

That is the same reason it’s typically a horrible idea to close a credit card. The potential upkeep costs for some of your cards might be a little irritating. But is a couple of dollars a month, if that, really worth sacrificing your credit score? By shutting down a credit card, you effectively wipe away its effects on your credit score. That means the ‘age benefits’ it was providing you with vanish. That can result in a drop in your credit score, which can confuse you.

Ironically, you also don’t want to take out new credit cards if possible. That is because their ‘freshness’ will also be reflected in your credit score! What it comes down to, then, is this: you want to open credit cards, but only when you are just starting your journey to build up your credit score. New credit cards at a later date will consistently do more harm than good. And it takes years for that situation to reverse and positively affect your credit score.

Mixing up your credit

Interestingly, having a ‘mixed’ credit history helps you. However, what does a mixed credit history even mean? It means you want as many different ‘sources’ of credits listed under your name as possible.

A credit card is one example of a credit source. A mortgage is another. An installment loan is yet another source. And then there are even multiple accounts, as we mentioned before. Any single one of these can help you improve your score on its own. However, they work best in concert, where a unified credit history paints a complete picture of you as a potential debtor. Since it is in the lender’s best interest to have as complete a picture as they can, including more sources of data improves your credit score!

If you’re one of the people who don’t like credit cards and don’t have one, we have an option for you! A single way to quickly improve your credit score is through a ‘new’ credit card. And that’s becoming an ‘authorized user.’ That lets you take advantage of a family member’s or friend’s credit card with a high limit and stellar history. By becoming an authorized user of that card, its history is automatically added to your credit score. And you don’t have to use the card yourself.

Still, do this only if you trust that friend or family member. You would, after all, be linking your credit score to theirs. Be aware that if they are suddenly forced to max out that credit card or shut it down, it will instantly cause a backlash to your credit score.

Leverage your monthly expenses

You may be surprised that it isn’t only paying off debts. Your credit cards and similar can count towards your efforts to improve your credit score. You can also take full advantage of your monthly expenses and bolster your results further!

There are three primary sources: your utilities, subscriptions, and rent payments. It is possible to set yourself up with a service, app, or software that reports these payments to the credit bureau. After all, typically, they would not receive automatic reports for these because they do not go through their systems. However, these monthly commitments prove the same thing your credit card or loan payment history does: that you are reliable and commit to paying your debts on time regularly.

As such, while the credit bureau will not go out of its way to obtain your data on such matters, it will naturally account for it if you provide it! And if you do, and you are, in fact, regular with your payments, you can improve your credit score considerably! Like nearly everything on our list, the only real risk here is that if you miss your regular payments for these, it will hurt your credit score.

Eliminate all debts you can

An unfortunate reality is that past debts do a lot of damage to your credit score. Yes, some, as we discussed, can turn in your favor. At least so long as you continue to pay them regularly. So, eliminating all your debts is the way to go. Still, this is something that everyone knows, so it’s hard to claim it’s a creative way to improve your credit score. Where we can offer creativity, however, is in the possible ways to do it!

One option people seldom think to try is renegotiating your debt repayment plan. A debt relief plan can be beneficial if you struggle with your payments. In some extreme cases, you can even get a part or the entirety of your debt waived! Admittedly, this comes down to the creditor and is entirely dependent on their willingness to negotiate. However, if you can make one large payment and reduce your monthly payment amounts, this can be a huge help all on its own!

Another helpful way to approach debt repayment, and one of the things you should consider before applying for a mortgage, for example, is breaking the payments up. Like with one of our previous tips, getting paid multiple times a month would let you handle the payments more efficiently. Again, the only problem with this is if the creditor does not allow for such a repayment plan.

Keep an eye open for credit errors

The final way to improve your credit score is not something you can actively work on. Instead, it is simple advice to keep an eye out for a dreadful possibility: an error with your credit report.

That does mean you will need to pore over your credit reports consistently. A single report with errors can set you back considerably, after all! These errors most commonly happen when two individuals have extremely similar personal data. Elements of their credit score get added to your own, and you are suddenly paying for the poor financial decisions of someone else.

You must immediately notify the relevant authorities if you notice such errors or inconsistencies in your credit reports. If they are not resolved quickly, it can be hard to do later.

Working on your credit score all the time is essential

Even with our 8 creative ways to improve your credit score, you need to understand that this will take time and a lot of effort. Only consistent work to raise your credit score will yield results!

Meta Description: Learn all about creative ways to improve your credit score quickly improve your credit score in ways you likely never imagined before!

Keywords: Improve your credit score

Picture Link:

https://unsplash.com/photos/xKmXZ4Fv63w