If you are a Millennial or an adult, you probably know what credit scores are and how well they affect your future financially. For those who don’t know, if you are planning on buying a car, renting an apartment or even getting a job, your credit care scores will play a very big role on how fast and able you’re going to achieve all these.
However most millennials and adults out there are still confused on how to improve their credit scores. Well that’s okay, you are actually not alone, a lot of people are currently facing the same dilemma and we’ll try to provide you with simple strategies you can use to improve your credit score.
What Is a Credit Score and Why Does It Matter?
Your credit card score is a three digit number that shows you how reliable you are when it concerns borrowing money. The number starts from 300 to 850.
The higher your credit card number the more creditworthiness you have. When lenders want to lend you money, they use your credit card scores to check how risky it will be working with you.
Even Landlords and employers do the same too. the higher your credit card scores, the more chances you have to get loans and the lower your interest rates too. So you see, there’s so many chances that come with a very good credit score.
Credit scores are categorized as:
- Excellent (750 and above)
- Good (700-749)
- Fair (650-699)
- Poor (below 650)
Now that you know what a credit score is, we’ll look at ways you can improve it!
1. Check Your Credit Report Regularly
Before you decide to change anything as regards to your credit score, you need to First of all know your current stand, your credit score is always calculated based on the information on your credit report.
So the first step of changing anything in your credit score is by checking your reports and having a better understanding of your current credit situation.
Everyone is entitled to one free credit report yearly from the three major credit bureaus:Equifax, Experian, and TransUnion.
You can use the report you discovered to check if you have any errors or issues (like a bill you paid that’s still unpaid)that might be hurting your score without your knowledge.
If you discover anyone, you can simply dispute them with the credit bureau and get it sorted.
2. Pay Your Bills on Time
The most important factor in determining your credit score is your payment history. Infact, 35% of your credit rests on whether you pay your bills on time or not.
If you have late reports, it can stay on your reports for up to seven years, so it is highly important that you sort your bills out as soon as possible.
If you find it difficult to remember to pay as at when due, you can set up automatic payments or put a reminder so you won’t forget. alternatively you can equally make use of apps that can possibly track due dates and alert you before time.
3. Pay Down Credit Card Debt
One of the biggest factors that can easily damage your credit score is high credit card debt.
If you happen to be carrying a balance, you should try to pay back as soon as possible, you can simply start with cards that have high interest rates or larger balances.
if you are able to pay off credit card debt, it will not only improve your credit score, it will also help you to save money on interest in the longer run for you.
4. Avoid Opening Too Many Credit Accounts
Most people make this mistake of opening too many credit accounts within the shortest period of time. The truth is whenever you apply for a new credit card, loan or mortgage, a “hard inquiry” will be made on your credit report.
Although a single inquiry won’t hurt your credit score drastically, if you make so many inquiries in a short period of time it can drop your credit score.
Too many new accounts will certainly make you look like a risky borrower, so instead of you applying for new credit cards or loans whenever you are in need of extra cash, you should focus more on maintaining the credit you already have.
If you ever have a need to open a new account, you should try and space the application so it won’t look messy.
5. Keep Old Accounts Open
One thing you should have at the back of your mind is that the length of your credit history actually makes up to about 15% of your entire credit score. So the implications is, the longer you have s credit, the better it is for your score.
So if you happen to find yourself in a situation where you might not need to use an old credit card anymore, I’ll still keep it open as long as you are not paying anything for keeping it open.
If you happen to close an account, it could actually shorten your credit history and it will definitely hurt your score. to be on a safer side, you could just consider locking it up or freezing your credit card instead of closing it entirely.
6. Become an Authorized User
In a situation where you have a family member or a friend who has good credit, You can ask them to add you as an authorized user on one of their credit cards.
As an authorized user, you’ll also benefit from their good credit habits, you can equally make on-time payment to keep your credit utilization relatively low.
FAQs on Credit Score Improvement Strategies for Millennials
1. Why is a Good Credit Score Important for Millennials?
A good credit score is essential for millennials as it impacts their ability to secure loans, rent apartments, and qualify for lower interest rates on credit cards and mortgages. It’s a key factor in achieving financial independence and stability.
2. What are Simple Ways Millennials Can Improve Their Credit Scores?
Millennials can boost their credit scores by:
- Paying bills on time.
- Keeping credit card balances low relative to their limits.
- Avoiding unnecessary hard inquiries on their credit reports.
- Regularly reviewing credit reports for errors.
3. How Long Does It Take to Improve a Credit Score?
The time required depends on individual circumstances, but consistent positive actions, like timely payments and reducing debt, can show improvement in as little as 3–6 months, with significant gains over 1–2 years.
4. Do Student Loans Affect Millennials’ Credit Scores?
Yes, student loans impact credit scores. Making on-time payments positively contributes to your credit history, while missed payments can lower your score. Managing student loan debt responsibly is key.
5. Is Credit Card Use Essential for Millennials to Build Credit?
While not mandatory, responsible credit card use is one of the easiest ways to build credit. Keeping balances low, paying off monthly bills, and maintaining a long credit history can significantly improve credit scores.
Final Thoughts
With the strategies we’ve listed in this article, you can easily boost your credit score especially if your credit history is well limited.
Make sure you apply these strategies, it’s worked for so many and there’s no reason why it won’t work for you too.