6 tips to improve your credit score
Here are some simple and effective tips that could help you improve the quality of your credit report.
1. Watch out for late payments!
Above all, do not pay your accounts late. It doesn't matter whether the amount owed is high or not, a delay remains a delay... A rating of R-3 or less risks being badly perceived by your creditors, whether for a $200 or $2,000 account and know that any bad mark remains in your file for 6 years. Discipline therefore pays off since it is the factor that weighs the most in the balance for the calculation of your score.
2. Keep an eye on the authorized limit!
Keep your credit card and line of credit balances low relative to your authorized limit (ideally 35% or less of it). In fact, the closer your balance gets to your authorized limit, month after month, the more your score will be negatively affected, even if you pay the full balance each month. A low ratio indicates that you would have the option of going into debt but are choosing not to.
3. Keep your “old” accounts!
Accounts (credit cards/line of credit/personal loan) that have been open for a long time “pay” more for your score than newly created ones. Keep them open, if possible, without multiplying them too much. Indeed, a longer history gives a better picture of your consumption habits and is a good indicator of stability.
4. Pay off your credit cards first
If you need to reduce your debt, always start by reducing the amount owed on your credit cards. 2 reasons: credit cards generally cost you more in interest than other types of credit. In addition, debt that is more expensive in terms of interest costs is generally less well regarded than debt that is more "affordable" in terms of interest costs.
5. Different types of credit, yes, but not too many!
Yes, having several types of credit (eg: line, loan, mortgage, etc.) promotes a better score. On the other hand, the fact of having several increases your debt, complicates the management of monthly payments and, in the event of delays, risks canceling the benefits to your score. So don't go into debt just to get a better score.
6. Beware of numerous credit applications
Avoid multiplying credit applications over time with creditors, because a high number of credit applications is harmful to your score and especially if you have refusals. Remember that a credit card form to "win a trip down south" or "get a day's discount" at a store is an application for credit, even if you don't keep the card after. Moreover, if you are shopping for a house or a car, these steps taken in a short period of time are usually considered by credit agencies as a single application. Ask the creditor(s) with whom you are shopping for a better rate.