Has your credit taken a hit in 2020? If the answer is yes you are not alone. Many people just like you have seen a good credit score turn bad. Yet, you don’t have to leave your credit like that in 2021.
There are credit experts available that can provide you with credit assistance to get you back on track. As the experts in credit assistance, we want to help. Here are some ways to improve your credit score in 2021.
Correct Errors on your Credit Report
One of the first things you can do to improve your credit is to find and correct any errors you have on your credit report. You can start by getting a free copy of your credit report annually for all three credit bureaus.
Once you have them you want to look over the information and dispute anything that you think shouldn’t be on there. For example, if your credit score is showing a late payment, but you made all your payments on time that is something you can dispute.
When you get errors on your credit report corrected you could see an increase in your credit score. Recently, the FTC reported that an average of 1 in 5 consumers has a credit report with an error. Errors or your credit report can cause you to pay more in interest because it affects your credit score.
Substantial errors can also prevent you from getting approved on a loan or credit card. This is why checking your credit report for errors is so critical. If you are in a situation where you do find an error on your credit report you want to notify the credit bureaus.
You can request your credit reports for free from annualcreditreport.com. A credit assistance program can help you take care of any errors on your credit report if you are unsure of where to start.
Limit New Inquires on your Credit Report
Since credit history and age can make a significant difference in your score you want to limit your amount of new credit inquires. Whenever you apply for a loan or a new credit card, you receive what’s called a hard inquiry on your credit reports.
This inquiry could lower your credit score initially. You want to create a plan for when you should apply. You also only want to apply for credit that you truly need and that you will most likely qualify for.
Limiting your number of hard inquiries can help you keep and even improve your credit score.
Pay Down your Existing Balances
A significant factor in the health of your credit score is your revolving debt. What this means is how much debt you carry compared to your credit limit. This is known as your credit utilization.
Carrying high amounts of credit card debt can lower your score. The reason being credit bureaus are looking at how much of your available credit you are using.
To improve your credit score, you want to reduce the balances of high-interest credit cards. Also, when you decrease your credit card balances it shows possible lenders that you can be responsible with credit.
Credit experts suggest keeping your credit utilization ratio below 30%. For instance, if you have a $15,000 credit card limit and you charge $7500 on it, your credit utilization ratio would be 50%. Anything over the 30% ratio will hurt your credit score.
So if you want to improve your credit score, set a goal to get your credit utilization ratio under 30%.
Get Credit Assistance
Sometimes understanding the best way to pay off your debt and improve your credit score can be difficult. Maybe you need help creating a budget or finding the best method to get started.
Consulting with credit experts can provide you with the credit assistance you need. When speaking with a credit expert they can offer debt management plans specific to you which can help you improve your credit in 2021.
Get a Credit Increase
Another simple way to improve your credit score is getting a credit limit increase from your current credit card providers. When using this tip to improve your credit score you want to remember that if you do get a credit increase you don’t want to spend any of it.
The main goal of this is to help improve your overall credit utilization ratio. The way this gets done is by increasing your available credit usage.
Understand your Credit Mix
One more way to improve your credit score in 2021 is understanding the importance of having mixed accounts in your credit report. What this means is lenders look for consumers who have multiple types of credit.
This credit mix can include, credit cards which are your revolving debt. It can include loans that show a fixed payment amount per month. The point is if your credit report only shows one type of credit it can make a difference in the health of your credit.
If you are unsure of how your credit mix affects your credit score consulting a credit report expert can be helpful.
Watch Your Credit Score
As a final tip in improving your credit score, you want to watch it. There are cases where people don’t even know what their credit score is. How can you improve your credit score if you don’t know what it is, to begin with?
Monitoring your credit score will allow you to pinpoint areas where you can improve. It will also allow you to see the factors that influence your score. If your score was to drop you would be able to take the right steps to fix it.
Do you need Credit Assistance?
You deserve to have great credit in 2021! We can help you improve your credit with our credit assistance program. This year take back control of your finances. Contact us today to get started.