5 Quick Tips to Improve Your Credit Score

Learn tips to improve your credit score

Did you know that your credit score can be the deciding factor when it comes to getting a loan, financing or even a credit card with good terms? Having a healthy credit score is essential for those who want access to financial products with lower interest rates and greater payment facilities.

However, many people don’t know how to improve this number, which ends up limiting their options.

In this post, we’ll share with you 5 quick and efficient tips to increase your credit score and ensure your financial health is up to date. These strategies can be applied by anyone, regardless of their financial history. Let’s go!

1. Pay Your Bills on Time

Paying your bills on time is the most important factor in maintaining a good credit score. This includes not only your loans, but also your utility bills, such as energy, water, telephone and internet.

A history of on-time payments is one of the main criteria used by financial institutions to determine your credit score.

When you pay your bills on time, you are showing creditors that you are a responsible and trustworthy person, which increases the likelihood of getting credit in the future.

In addition, late payments can result in high interest rates and penalties that further harm your financial health.

A good tip is to use payment alerts or set up automatic debits to avoid forgetting to pay. If you are unable to pay the full amount, it is important to try to negotiate with creditors to prevent the delay from continuing.

2. Keep Credit Utilization Below 30%

Experts recommend never using more than 30% of your available credit limit. If you have a credit card with a limit of R$ 5,000, for example, try to keep your balance below R$ 1,500.

This demonstrates to lenders that you know how to control your spending and aren’t overly dependent on available credit.

Using more than 30% of your limit can signal that you’re experiencing financial difficulties or are repeatedly getting into debt, which could hurt your credit score.

If possible, try to pay your credit card balance in full each month to avoid high-interest rates.

3. Avoid Too Many Credit Inquiries

Every time you apply for a loan, mortgage, or even a new credit card, financial institutions check your credit history.

This is called a “credit inquiry,” and when done excessively, it can negatively affect your credit score. Too many inquiries can give the impression that you’re in financial trouble and need more credit, which may be seen as a risk.

Therefore, avoid making multiple credit requests in a short period. Instead, plan your financial needs ahead of time and look for options that fit your budget.

4. Build a Solid Credit History

The longer you have open credit accounts that are paid on time, the more trust lenders will have in you. The average age of your credit history plays a big role in your score.

This means that constantly opening and closing accounts won’t help. Even if you don’t need credit right now, keeping a credit card or loan account open and in good standing will help you build a solid and positive history.

Avoid closing old accounts because the length of your relationship with a creditor is one of the factors used to calculate your credit score.

5. Settle Your Outstanding Debts

Unpaid debts and outstanding balances have a direct impact on your credit score. When you leave a debt unpaid, it can be reported to your name, creating a negative mark on your financial history. To improve your score, it’s essential to resolve these pending issues.

Even if you can’t pay the debt in full right away, a good option is to negotiate a payment plan with your creditors, which may be more financially manageable. After settling the debt, your credit score will gradually begin to improve.

Improving your credit score is not an immediate process, but with discipline, planning, and the application of these 5 tips, you’ll be on the right path to a healthier score.

A good credit score can open doors to better financing and credit terms, as well as help you avoid high interest rates and make accessing financial services easier.

Remember to monitor your score regularly, especially after implementing these changes, to see how your situation evolves.

Written by

Juliana Raquel