The first step to improve your credit score is knowing your credit score. Your score is important when it comes to getting approved for the best rewards cards and lowest interest rates on mortgages, car loans and other long-term loans.
A credit score of 720 or higher is considered “good.” If your score is below 720, that’s ok! No need to worry, because we’ve laid out some foundational ways to help you improve your credit score:
Get an anchor card
One of the quickest ways to improve your credit score is by having an “anchor card.” Anchor cards are cards that are typically targeted to people with lower credit. These cards often have low credit limits to help people new to credit cards ease into using them. They do not have annual fees, which is great because they typically do not offer rewards. RewardStock can recommend an anchor card for you.
Pay your bills on time and in full
This one goes without saying, but make sure you pay off all of your bills (credit card, loans, utilities) in full and on-time (read: “early”).
Maintain a low credit utilization ratio
Also referred to as “amounts owed,” this makes up 30% of your credit score. This is the amount owed in relation to the credit limit on your credit card. Credit companies recommend you stay below 30% utilization. This means if you have a card with a limit of $1,000, never exceed spending more than $300 at any given time.
Review your credit report routinely
You should review your credit score very often. Make this routine, but at least monitor on an annual basis. Here are 2 ways to monitor your credit score. Not only will this help keep track of your credit score changes, but routine checks also help locate any inaccuracies that may be on your credit history.
Diversify your credit profile
As you begin to build your credit, having a mix of credit accounts is extremely helpful. These are credit cards, mortgages, car loans, long-term loans, etc. This shows that you can manage your financial relationships.
Best way to improve your credit score
Following these steps will help you improve your credit score, but responsible credit card usage is the number one way to build your credit. Remember to never treat credit cards as “someone else’s money” and always spend only what you can afford to spend.