- Reduce your credit utilization
- Dispute incorrect credit entries
- Check financial insights
- Devise a credit score improvement plan
When you apply for loans, credit cards, mortgage, and even certain jobs; chances are that the concerned authority will check your credit score during the application evaluation process.
A credit score is typically determined by your repayment history, loan accounts, late payment entries, frequency of loan applications, and credit utilization. A high credit score shows that you are financially responsible and good at handling a mix of credit accounts. This could also help you secure affordable insurance premiums, as well as loans at a low interest rate.
A low credit score, on the other hand, may come about because of missed repayment deadlines, late payment entries, and too many loan applications.
Here are a few ways to get your credit score back on track:
Always Check Your Credit Score
Regularly monitor your credit score from any of the major credit bureaus like TransUnion, Equifax, or Experian. You could also join Credit Karma’s community to fetch your credit profile from Equifax and TransUnion for free every month.
Any changes to your credit reports are usually updated on a monthly basis. Credit Karma’s free credit monitoring services will alert you of any changes to your reports including hard loan inquiries, changes to your personal information, and new loan and credit accounts. A vivid picture of your credit report will help you understand the negative factors that might be affecting your credit score. It will also help you create a credit score improvement plan and monitor your progress every month.
Dispute Erroneous Entries ASAP
Incorrect entries are very common on credit reports, and they could tank your credit score even if you do everything right. If you never check your credit profile, though, you may never know that incorrect entries exist on your credit report. These entries could stay on your report for years if gone unnoticed.
Whether it’s an incorrect late payment fee or a new loan account you don’t recognize, Credit Karma can help you raise disputes with TransUnion or Equifax. The credit bureaus will then get in touch with the lender to verify the disputed information. If the entry was indeed incorrect, it will be removed from your credit report, and you will be notified of it right away.
Lower Your Credit Utilization
Even if you make timely repayments, maxing out your credit card limits could negatively impact your credit score, as well. In fact, a high credit utilization record could portray you as a high-risk borrower in the eyes of lenders.
Think of credit utilization as the ratio of how much you are borrowing from your credit card to the amount you can borrow (the credit limit). Try to bring down your credit utilization below 30 percent to minimize the chances of a negative credit impact. You can use the Credit Karma app to monitor your progress every month while taking advantage of a host of other features designed to improve your financial knowledge and well-being.