Millennials have notoriously lower credit scores than their predecessors – the average score hits in the low 620s. However, your credit score is updated each month, so even if your score isn’t where you want it to be, a better credit score can be in your future if you follow the 6 simple steps below.
A better credit score can help you get better rates on just about everything. While boosting your score usually takes about 18 months – there are some things you can do to get a little boost right away. Let’s look at some of the tips and tricks from CNN Money to help you increase your credit score.
1. Open a credit card – keep it open – and pay it off regularly.
Having an open credit card will help boost your credit, and keeping it open for years, while paying it off regularly – will add to your credit even further. However – remember that falling behind on payments – can ding your credit instead of helping it.
2. Become an Authorized User on someone else’s card.
If your parents have credit cards, ask if you can become an authorized user on their cards. This will allow you to make changes to the card (such as address changes) but the user does not have to give you access to the card finances. Additionally, you will get the benefit of the card’s history – which can boost your score as well.
3. Keep your credit card usage low.
If you are spending the max on your card each month and then paying it off, it is better than falling behind on payments – but experts suggest that keeping usage low (under 10%) of your credit line can significantly improve your score as well.
4. Pay off big items early.
If you buy a big ticket item, experts suggest paying it off before the bill becomes due. Since the typical credit card company submits the statements on the closing date, if you ARE purchasing big-ticket items, paying them off before the bill comes due, can keep the usage rate low. However, a risk you could assume with paying off your card like this is that if your card is consistently at a zero balance this may also harm your score.
5. Pay Rent on Time.
Some, not all credit bureaus take rent history into account when calculating your credit score. Even though this isn’t standard yet, anytime you are late on rent or fail to pay. This negative activity will usually stick to your credit score for an extended period of time.
6. Know your score.
Knowing your own credit score is a good way to know what you need to improve. If you don’t know your score, credit bureaus are required to provide you with one free credit score disclosure a year – and many banks now display your score in your account activity. Knowing your score can help you grow your score.