It’s a sheer myth that checking your credit score lowers it. No, it doesn’t. But if you request your lender to reveal your credit, then that’d be considered as a hard inquiry, and may hurt your score.
The good news for you is even if your credit score dips, there are plenty of ways you can make it stand up on its feet again. Assuming you are not informed already (Or poorly informed), I am going to discuss some viable ways to improve your credit score here.
Pay bills on time
Always pay the bill on time. Trust me, those who assign scores on your credit report love it. In fact, when you pay the bill on time, you help the economy to move forward. You are a taxpayer, right? And you pay your taxes on time. So why should there be a separate rule for credit bills?
Remember, credit scores are made of your credit report. And your credit report has it all; which month you paid the bill late, how late it was, everything. You can’t suppress it. If you’ve been paying your bills on time month after month, then you have a glowing credit report, and your scores are bound to shine.
Take advantage of old debts
The ones, which you’ve already paid down. It’s a bit complicated, so bear with me. Let’s say you borrow money to buy a house or a car. You don’t want to be indebted and pay down the entire debt in next few years. Afterwards, nine out of ten people would ring the credit agencies requesting them to remove the debt from their credit report. Don’t do that.
Let it stay there on the report. In future, if you knock on a lender’s door, he’d check the report, and find that you’ve handled a debt incredibly well. That’d help you win his trust. A bit of intelligence, and you can use debt in your favor.
It’s your money and you can invest it anyway you want, right? Wrong. On paper you can, but not in reality. If you can’t separate a good investment from a bad investment, that’d make a hefty impact on your credit report, and your score will look bad. Don’t want that? Then learn to separate a good investment from a bad investment.
A bad investment, in this context, refers to any investment, which gives a potential lender a hint of risk. For example, you have taken our cash to pay for a divorce attorney. When a lender finds that out in your report, he might think of the upcoming financial stress, which you’d have to undergo because you might have to pay your spouse alimony, and that might put you under financial stress.
Gap between applications
Being prudent can help you improve your credit score. A mistake many people make is they don’t keep a substantial gap between two credit applications. Now the problem with mortgage, student loan and auto loan is you make plenty of applications, but get only one loan.
Fortunately for you, most lenders rely on the FICO score, which doesn’t acknowledge two consecutive applications having a gap of less than a month. That means if you make two applications for an auto loan in two consecutive months, there’d be no impact on credit scores. Hence if you are making more than one application, make sure there’s a gap of at least a month between them.
Low credit balance
You have to be frugal. If your card is low on balance, then shop less. A high credit balance leads to high outstanding balance. If you don’t replenish the deficit quickly, your credit report will reflect that, and probably lower your score.
Outstanding debt is a problem, which the whole nation is facing. By quickly adjusting your outstanding balance (If any), you can stop the vicious circle of debt-interest-more debt. If your report shows you have always refilled your credit balance on time, that’d increase your odds of getting a loan in the future.
If you keep yourself updated about your credit score, then it’s unlikely for you to fall into the spiral of debt. You can observe the highs and lows, when the credit is going south and when it’s showing an upward trend. If you see your credit score is going down, follow some quick hacks to improve it, and then some long-term steps to keep it that way.
This way, you’ll always have a clean credit report, and never feel worried to produce it to lenders.