Having a low credit score is sort of like starting a marathon with 5 kg weights tied to your ankles. You can keep running, but it’s just going to hold you back from doing your best. 

A low credit score is an indicator of bad financial health for potential lenders and banks. Having a good credit score can open a lot of opportunities for you. It can help you get new loans with lower interest rates or credit cards.

Sounds great, doesn’t it? However, you should know that there is no secret formula that can improve your credit score overnight. 

All good things take time, so let’s talk about how you can boost your credit score for 2021. 

How To Improve Your Credit Score For 2021

If you want to improve your credit score, you need to be ready to put in the time and effort required to build your financial health. Here are some steps you can take.

Analyze Your Current Credit Reports

The first step is to find out where you currently stand. By looking at your current credit reports, you can see what things are currently going against you. You can fix them to improve your credit score. 

Remember that you actually have three credit reports—- one each from Equifax, Experian, and TransUnion. These are the three credit bureaus in the United States. 

Pull a copy of your credit score from AnnualCreditReport.com, which you can do for free once every year. Review each report and try to look for areas that are hurting our credit score. Check out your:

  • Current debt
  • History of on-time or late payments
  • Age of accounts
  • Account diversity
  • History of credit inquiries

Important note: Remember to check credit reports for errors. Sometimes there are mistakes from the bureau that drag your score down. Dispute them and correct them as soon as you can.

Pay Bills On Time

Avoid late payments like the plague. They are absolutely devasting for your credit score. The first step to improving your credit score should always be to make all your bill payments on time.

  • Set due date alerts on your phone.
  • Try automating your bill payments with your bank.
  • Create a filing system to keep track of bills.

Maintain a 30% Credit Utilization Score

Credit utilization is the amount of your credit limit you’re using at a point in time. The best way to keep it down is to pay your credit card balances in full every month. If your limit is $10,000, you should stay at around $3,000 to improve your credit score.

You can also increase credit limits if staying at 30% is problematic. Ask your current credit lines if they will increase your limit, which will instantly decrease your overall credit utilization.

Keep Old Accounts Open

Another thing that impacts your credit score is how long you have your credit accounts open. The older your average credit age, the better you look to lenders when you need money down the road. 

We suggest that even if you have old credit accounts that you are not using, keep them open. Though the credit history for those accounts will remain on your credit report, you could potentially lower your available credit if you close credit cards while you have a balance on other cards. You don’t want to increase your credit utilization ratio.

Use Secured Credit Cards

Another way that you can build credit from scratch is by using a secured credit card. A cash deposit backs a secured credit card, it is paid for upfront, and the deposit amount is typically the same as your credit limit.

You can use it like a regular credit card, and making payment on time will help improve your credit. We recommend using a secured card that reports your credit activity to all three of the credit bureaus we mentioned above.

Credit Fair-E Can Also Help You Improve Your Credit Score For 2021

We think that improving your credit score is an excellent goal to set in the coming year, especially if you’re looking forward to a significant purchase, like a new car or home. It can take months to see a noticeable impact on your score once you start following some of the steps outlined above. The sooner you begin working to improve your credit, the sooner you will see results.

When used correctly, the Credit Fair-E personal loans can help you improve your credit scores. How? They can:

  • Reduce your credit utilization ratio
  • Create a positive payment history
  • Diversify your credit mix

We are committed to helping you achieve financial health by pulling you out of the debt cycle once and for all.

Want to learn more? Contact us here. We would be more than happy to answer your questions and get you on the path towards financial health.Or, if you’re ready to take out your loan, you can fill this application today!