To improve your credit score, pay off card balances, build a positive payment history, make multiple payments each month and fix credit report errors.
A credit score of 600 can have a ripple effect, from the car loan you can afford to the apartment you can lease to the interest rates you pay on your credit cards.
Ideally, you can work to raise your credit score to 700 or above, a benchmark many credit bureaus use for better rates and terms.
When you use a lot of your credit, credit bureaus worry you’re not using it responsibly. So they’re likely to lower your credit score. Try to use no more than 60% of your available credit, across all your cards and lines of credit.
If you haven’t tried a pay-off method yet, check out the Avalanche and Snowball methods. They’re both proven, step-by-step strategies for paying off card balances.
When you pay your bills on time, credit bureaus reward you with a bump in your score. Paying your credit card bills on or before the due date, as you’ve agreed, signals you know how to handle credit responsibly.
A positive payment history is one the most important factors credit agencies use to determine your score.
When you make multiple payments within a payment cycle, credit bureaus view this as responsible behavior and reward you with a boost to your score.
Your bank or card issuer may not prompt you to make any payments before a payment cycle’s due date. Using your own calendar reminders – or apps like Bright – can help make extra payments, even small ones, that can boost your score.
Credit cards are notorious for high interest rates. With a balance transfer, you’ll secure a lower interest rate and enjoy lower monthly payments every month. It’s a cost-efficient way to pay off cards faster.
Take a look at your statements over several months, and add up what you’ve paid just in interest payments.
Check your credit report for errors. Federal law requires all three credit bureaus to provide you a free credit report every 12 months.
Look for errors in charges and payments that might be impacting your score.
In 2022, it’s as important as ever to work towards a healthy credit score. With a higher score, you’ll access lower interest rates and better loan terms that can help battle current inflationary pressures.
Interest rates on loans are likely to rise throughout 2022. Car prices, both used and new, are expected to go up, as well as housing prices.
A healthy credit score can give you more options and make large and small purchases more affordable.
Bright can pay off your cards fast, using our new patented MoneyScience™, a system of 34 algorithms that finds the fastest, smartest way to get you debt-free.
Bright's MoneyScience™ studies your finances, moves funds when it makes sense and makes card payments for you, always on time and always optimized to save you money on interest charges, automatically.
If you don't have it yet, download the Bright app from the App Store or GooglePlay. Connect your bank and your cards in a couple of minutes, set a few goals and let Bright get to work.
With a postgraduate degree in commerce from The University of Sydney, Pranay has his finger on the pulse of the finance industry. Breaking down complex financial concepts is his forte.