Four Simple Ways to Start Boosting Your Credit Score Today

The experts at FICO (the company that is responsible for calculating the most frequently used credit scores) say that only about one percent of the population can attain a perfect credit score. Perfection might be out of your reach (for now), but that doesn’t mean you can’t start making progress toward improving your credit score. Whether you have okay credit, bad credit, or no credit at all, there are lots of simple things you can do today to boost your credit score. Why Does Your Credit Score Matter? You might be wondering why you should care so much about your credit score. In short, a high credit score improves your chances of getting approved for loans, mortgages, and credit cards. Can’t you get a loan with a loan credit score? In most cases, yes. But, the better your score, the better interest rate you’ll get and the greater amount of money you’ll be able to borrow. What Constitutes a Good Score? Credit scores range from 300 to 850 and are graded based on the following numbers: Below 580: Poorrn580-669: Fairrn670-739: Goodrn740-799: Very Goodrn800+: Exceptional It’s important to note that a poor credit score doesn’t always indicate that you have a lot of debt or have been slacking on your bills. Your credit also takes a hit when you close accounts. Keep in mind, too, that if you simply have not taken on any debt before, credit bureaus will not have any information to use to give you a credit score. rnHow to Boost Your Credit Score? Okay, so you’re convinced that a good credit score matters. But, how do you go about building up credit or increasing your credit score? These four tips are a great place to start: 1. Pay Down Your Credit Card Balance Thirty percent of your credit score is based on the amount of money you currently owe. However, credit bureaus also pay attention to the ratio of what you owe to the amount of credit you have. For example, if you had a credit card with a $2,000 limit and a $1,000 balance, then your credit utilization rate would be 50 percent. Generally, you want to keep credit utilization to about 30 percent. When it goes above 30 percent, your credit score may be negatively affected. One of the simplest (although not always easy) ways to help out your score is to pay down your balance so that your utilization is at 30 percent or below. If you feel like there’s no way you can pay off your total balance all at once, don’t worry. Start chipping away at it and make 30 percent your goal. Once you’ve reached that, you can work on paying off the remaining balance. 2. Get a Secured Credit Card If you don’t have any credit built up, you might not be able to get approved for a credit card right away. Don’t despair, though. Instead, talk to your bank or credit union about getting a secured credit card. A secured credit card is a card that requires you to put down a cash deposit as collateral. The amount of cash that you put down becomes the credit line for that particular account. For example, if you pay a $500 deposit, you’ll have a $500 credit limit on that particular card. This is a low-risk way to start building credit. Over time, you may be able to increase your credit limit. Many secured credit cards also come with benefits like cash back options, so they’re a great option to help you start building credit. 3. Increase Your Credit Limit If you’re not able to pay down your credit card balance right away, one way to improve your credit score is to increase your credit limit. This will decrease your credit utilization rate and give your score a boost. The key, of course, is to make sure you don’t continue to spend this new credit -- that’ll take you right back to square one. The increase is a temporary measure that will improve your credit score -- it’s not an opportunity to spend more money that you don’t actually have. 4. Open a New Account If your lender won’t increase your credit limit, or if you simply don’t want to take that route, you might also want to consider applying for a new credit card from a different lender. This will improve your credit utilization rate since it is based on all open lines of credit. Be sure to not go HAM on this approach, though. Opening a ton of new accounts will make it look like you’re desperate to spend money -- something credit bureaus and lenders tend to frown upon. Apply for one or two new cards, then call it quits. This will boost your credit without causing lenders to give you the side-eye. Final Thoughts Boosting your credit score or building credit can seem daunting at first. But, as you can see, there are lots of simple things you can do that will quickly add up in a big way. Give these strategies a try today and you’ll see your credit score soar before you know it!