Seven Steps To A Healthier Credit Position

Your credit is a more important part of your financial health than many might assume. It can determine your ability to access loans, be it to buy a car, to buy a house, or otherwise. Your credit score and report can even be used to determine your eligibility as a renter or an employee in certain industries. As such, if you haven’t been paying much attention to it, now’s the time to start building it. A failed credit check can be the wake-up call many need to take it seriously, but here are the steps you can use to start moving things in the right direction.

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Track Your Credit Score And Report

First and foremost, you need to start paying attention to your credit score and full credit reports. Each of the three major credit bureaus, Equifax, Experian, and TransUnion, provides a free report to anyone they track, once a year. Many banks also offer ongoing access to your credit score. The score is a living metric that should be used as an indicator that you can improve your credit trustworthiness, and a steep drop in it is a sign that you should look closer, but your report is where the real meat is. It provides in-depth information on your accounts, credit history, and any negative marks that might stand out to lenders.


Keep Current With All Your Repayments

Your credit report is going to get into the specifics of what is affecting your credit score, but one of the best places to start is by making sure that your repayments are all current. Your credit score is perhaps the biggest factor impacting your credit, and even a single late payment that’s more than 30 days overdue can significantly lower your score, remaining on your credit report for years to come. Prioritize making repayments on time across installment loans, credit cards, utility bills, and more. Make sure that you set up automatic payments or reminders to avoid the all-too-common accidentally missed deadline.


Lower Your Credit Utilization Rate

Many aren’t aware that credit reporting companies track not just their payment history, but how much of their credit limit they’re currently using. This is your credit utilization rate, which is a measurement of how much of your total open credit, including credit cards and overdrafts, you’re currently using. It’s highly influential on your credit score, so it’s typically recommended that you keep it below 30% at least, but usage rates of under 10% are even better. Being too deep into your open credit accounts signals a degree of risk to lenders, even if you do make your payments on time. As such, it might be worth starting to pay down your balances. It also reduces how much interest you’re going to have to pay each month.


Dispute Incorrect Records On Your Report

Credit reports aren’t always as accurate as you might think. Even small mistakes like misreported balances or someone else’s accounts appearing under your name can make a big dent in your credit. Take the time to look up how to win an Experian dispute, and be aware that you can hold the credit reporting companies directly responsible for not showing accurate records under your name. If the original source of the incorrect record, be it a bank or utility company, isn’t quick enough in removing that mark from your account, then file a dispute directly with the credit bureau. These disputes have to be investigated within 30 days and resolved in 90 days under federal law, so it’s worth starting the process as soon as you spot them.

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Register On The Electoral Roll

Although it might seem like it wouldn’t be relevant to your credit, getting onto the voter registration list can legitimately improve your credit score. After all, it serves as a means to verify both your identity and your address history. Establishing your identity, that you are who you say you are, and having an identifiable location, reassures creditors that you’re credible and less likely to default. By contrast, those who don’t have a registered fixed location or proof of their identity are at a greater risk of leaving debts unpaid and being harder to track down in the event of collections or other recuperation methods.


Keep Multiple Credit Types Open

You might think that, upon catching up with all of your credit accounts, closing them might help you avoid any future payment issues with them and, in turn, improve your credit history. However, the opposite is true. Having open credit accounts of different types showcases your credit history, providing clear proof that you’re able to manage them effectively. This includes opening a credit card, installment loans, and other accounts. Of course, it’s worth only using them for purposes that match your lifestyle or financial goals, and with repayment plans already in place. You should also keep older accounts open, as they can contribute to the length of your open credit history, which can boost your score even further over time.


Avoid Applying For New Credit Too Often

Whether you’re looking for a specific loan and want to apply to multiple providers, or you’re trying to grow your credit history by opening new lines of credit, you should avoid applying for them too often in a short period of time. Every time you apply for credit, it starts a hard inquiry into your credit report, which is also added to your report. When done infrequently enough, these have a minimal impact on your history. However, if there are too many hard inquiries on your credit report, it can look to lenders like you’re desperately trying to apply for whatever credit you can get, which is not a good look. Space out applications and keep them deliberate to avoid any unnecessary score drops.


A good credit score and history effectively open the doors to more financial options, allowing for much more effective long-term planning. Starting to improve it is as simple as getting a good understanding of your current position. From there, you can tackle the issues affecting your score one by one.

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