How to Improve Your Credit Score in 5 Easy Steps

Your credit score is one of the most important numbers in your life.

It can determine whether you can get a loan for a car or house, and it can even affect your insurance rates. If your credit score is low, it’s time to start working on improving it. In this blog post, we will discuss five easy steps that you can take to improve your credit score. Follow these tips and you will be on your way to a better credit history!

So, what’s a credit score?

Your credit score is a number that ranges from 300 to 850, and it is based on your credit history. Your credit report is a record of your credit activity, including all of the loans that you have taken out, any late payments that you have made, and any other information about your financial history.

Step One: Find out your current credit score

The first step to improving your credit score is to understand what is on your credit report. You can get a copy of your credit report and credit score easily – and in some instances for free – using resources like Credit Karma, Credit Sesame, or other resources listed in the ***** article.

Now that you know your credit score, you can find out more details about what is influencing your score. Do this by pulling a free copy of your report from each of the three major credit reporting agencies: Experian, Equifax, and TransUnion.

Once you have your reports in hand, take a look at them carefully to see what is impacting your score. Are there any late payments? Any accounts in collections? Any high balances? Any errors?

Take note of anything that is dragging down your score. These will be the basis for creating a plan to improve your score.

Step Two: Understand the factors that impact your score

By understanding the factors that impact your score, you can create a plan to improve it. Here are a few key things to remember:

  • Payment history makes up 35% of your score, so late or missed payments will have a big impact.
  • Amounts owed make up 30% of your score, so carrying high balances on credit cards or loans can impact your score.
  • Length of credit history makes up 15% of your score, so having a long history of making on-time payments can improve your score.
  • New credit accounts make up 10% of your score.
  • Credit mix makes up 10% of your score.

Step Three: Create a Plan to Improve Your Score

The first part of creating a plan is to set some goals. For example, if you have late payments, your goal may be to get current on all of your accounts. If you have high balances, your goal may be to pay down those balances.

Once you have some goals in mind, the next part of creating a plan is to come up with a strategy for achieving those goals. For example, if your goal is to get current on all of your accounts, your strategy may be to set up automatic payments so you never miss a payment again.

If your goal is to pay down your balances, your strategy may be to focus on paying down the account with the highest balance first, while making minimum payments on all of your other accounts.

Step Four: Take Action and Set Up Systems

The next step is to take action and start working on your plan.

It’s great to make a manual change, but you are only as good as your systems, not your willpower.

This may mean setting up automatic payments, making extra payments on your accounts, or transferring balances to a lower interest rate credit card.

Step Five: Monitor Your Progress

Once you start taking steps to improve your credit score, it’s important to monitor your progress to make sure your efforts are paying off. You can do this by pulling your credit reports and scores regularly. By monitoring your progress, you can adjust your plan as needed to ensure you reach your goal.

By following these five easy steps, you can improve your credit score and improve your financial health. And remember, the sooner you start, the sooner you’ll see results.

Jordanne Wells

Jordanne Wells is your Master Instructor. She is a Certified Financial Educator, holds her Bachelors of Art Degree in Economics, has advised first generation wealth builders on personal finance and wealth building through her organization Wealth From Scratch.Club. She is the author of the personal finance book Credit From Scratch and her work is featured on Good Morning America, CNBC, NextAdvisor and more.

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