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Part 6:

Our Step-by-Step Guide

Part 4
6 Steps to Improve Your Credit Score
  • 1.If you are starting from scratch, a.k.a. have no credit history, start off with a secured card through either your current bank/credit union or one of the major credit card issuers. You may also qualify for a store card (such as Walmart, Target, or a more specialized retailer) but these cards carry more financial risk than a secured card. Either way, the sole purpose of these cards should be to use them each month and pay them off in order to build a solid credit score.
  • 2.Check all three bureaus for any incorrect information - there could be false information harming your score and you wouldn’t even know it. You can dispute any inaccurate information through the 3 credit bureau websites, depending on which report(s) the discrepancy appears on.
  • 3.If you have any accounts in collection on your report, you will want to settle them ASAP. Once a settlement has been reached with the collection agency, the account can no longer affect your credit score. However, keep in mind that accounts will disappear from your credit report 7 years after default, so if you have any older accounts that are about to cross this line it may be just as beneficial to wait them out.
  • 4.Get your utilization to ~20%. You have two strategies to choose from for this step, and they’ll work best if you use them in tandem: pay down your debt and get more credit. Paying down your debt is pretty straightforward, but if you don’t know where to start you can check out Our Step-by-Step Guide on How to Become Debt-Free. You can increase your available credit by either requesting a higher credit limit on an existing card, or by applying for a new card altogether. The important part is that you do not spend any of this new credit, otherwise your credit utilization will not improve.
  • 5.Always make payments on-time and, if possible, pay your balance in full. Your statement balance will still count toward your 20% utilization, even if you pay it in full every month. Following this practice will prevent you from collecting interest and will improve your credit score over time.
  • 6.Keep credit card accounts open, even if you no longer use them. If possible, though, you should attempt to use each credit at least once a month, then pay them in full when your statement is issued. This will improve both your credit history length and utilization, and have the greatest positive impact to your credit report.
Piggy Bank

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