Bad credit is a hindrance to so many things you might want to achieve. From getting approved for a loan to renting a house or apartment, your poor credit score will always work against you. It’s only natural for anyone with a 317 credit score to want to improve it. With a few strategies and a lot of discipline, you can make a significant impact and work your way to a healthier credit score. In this post, we’ll share five things that should help you achieve just that.
1. Review Your Credit Reports
Before delving any deeper into the process of improving your credit score, it’s crucial to know where you stand. Start by seeking a copy of your credit report from the various credit bureaus. Free annual credit reports are available online, so you don’t have to worry about the expense. Check for any errors that may harm your score, such as incorrect late payments or balance amounts. If you find any mistakes, dispute them and have them corrected.
2. Start Making Timely Payments
One of the most important habits you need to develop is making on-time payments. Once you make a late payment, it hits your credit score, and the damage is done. Set up automatic payments or reminders to ensure you never miss a due date. If you find yourself in a place where you’re continually failing to make payments on time, prioritize the most important accounts, such as rent, car payment, and utilities.
3. Reduce Your Debt
If you have a lot of outstanding debt, it can hurt your credit score. Start by creating a spending plan to help you stay on top of your finances and curb unnecessary expenses. Then, you can start taking steps to minimize your debt. Start by paying off the debts with the highest interest rates first. This approach ensures that you minimize your interest expenses as you work towards paying all of your debts. Avoid applying for new credit cards or loans before you’ve cleared your current debt.
4. Keep Your Credit Utilization Low
Credit utilization refers to the amount of credit you’re currently using compared to your available credit. Keeping your credit utilization low can work wonders for your credit score. Aim to use no more than 30% of your available credit, and never reach your credit limit. One way to achieve this might be to spread your expenses over several accounts, rather than one. Additionally, you can request a limit increase from the credit issuer, which can give you more available credit and lower your credit utilization.
5. Avoid Closing Accounts
Closing credit accounts may seem like a logical solution as you work towards clearing your debts, but it could have unintended consequences. The age, credit mix, and available credit on your accounts all contribute to your credit score. Closing accounts means you’re losing that history, which might lower your score. Additionally, the credit issuer may report the account as closed at the debtor’s request, which could appear negative.
Wrap Up
Improving your credit score is not a one-time fix; it’s a continuous process that requires discipline and patience. By reviewing your credit reports, making on-time payments, reducing your debt, keeping your credit utilization low, and avoiding closing accounts, you’ll be well on your way to a healthier credit score. As with any goal, the most critical thing is to start. Take your first step today, and you’ll be that much closer to the credit score you want and need.
James Hendrickson is an internet entrepreneur, blogging junky, hunter and personal finance geek. When he’s not lurking in coffee shops in Portland, Oregon, you’ll find him in the Pacific Northwest’s great outdoors. James has a masters degree in Sociology from the University of Maryland at College Park and a Bachelors degree on Sociology from Earlham College. He loves individual stocks, bonds and precious metals.