If you are a business owner, you may have measures like fraud chargeback protection or a financial manager to shield you from poor credit. Individuals need to take measures to monitor and raise their credit scores as well.
1. Pay On Time
This may be obvious advice, but there is no better way to raise your credit score than making your payments on time. Your number of on-time payments has a huge impact on your credit score. If you are struggling, make a budget to see where you can cut down on your spending. Contact family and friends who may be able to loan or give you even a small amount of money.
2. Stay In Touch With Creditors
If you are having trouble paying your bills on time, make sure that you let your credit card companies and loan issuers know as soon as possible. Creditors want to work with you because they want to collect as much of your debt as possible. They may be able to alter your payment plan or even provide you with a temporary forbearance on payments.
3. Understand Credit Utilization
One important way to raise your credit score is to use as little as your available credit as possible; this is called lowering your credit utilization rate. You can do this by making more than one payment per billing cycle if possible. Your creditors may be willing to raise your credit limits, which would lower your utilization percentage. You can also reduce your utilization by paying more on accounts with higher balances.
4. Check Your Credit Report
Not only should you pull a copy of your credit report before applying for a new account, but you should also look at your reports on a regular basis (at least once per month). Make sure that you examine your reports from all three credit reporting companies: TransUnion, Equifax, and Experian.
This way, you will know as soon as possible if there is an error on your report or if someone is trying to open accounts in your name. Businesses can use companies like Ethoca to protect against fraud; you can use credit monitoring services to catch bad charges as soon as possible.
5. Do Not Close Older Accounts
Even if you have completely paid down a credit card, you should not close the account if the card is at least a few years old. This is because the age of your credit accounts affects your score. When you apply for new credit, creditors will want to see that you have maintained a good relationship with other creditors for a long time.