Credit scores are an essential factor in various financial decisions and negotiations. For example, they can impact how easy it is to obtain a loan or credit card and interest and payment rates on those items. In addition, credit scores are reviewed for car leases and homeownership, even if some people prefer not to think about them.

Raising Your Credit Score

For those with bad credit, obtaining favorable rates for loans and leases can be difficult. Fortunately, credit scores are not static. It is possible to raise a credit score. It can take time, but by taking the proper steps, a better score is possible.

Check Credit Report

First and foremost, obtaining a credit report is an excellent place to start. A credit report will show why the credit score is low. The usual reasons for a low credit score are issues paying debt on time or seeking out too many credit card offers. However, payment history and use of credit make up the bulk of determining a credit score. While paying bills on time might seem obvious, the fact that they sometimes can’t be made on time is a common difficulty that unfortunately leads to a cycle of debt and poor credit.

Consolidating Debt

Debt consolidation is one option. Using credit to cover loans sometimes works, as that can also help improve credit. Using credit with a lower interest rate to cover a debt at a higher interest is an option in the short term to catch up on bills. Don’t rely on credit too much, though, as heavy usage will negatively impact a credit score. Generally, a line of credit should only have about a third or less used.

Additional Lines of Credit

People tackling debt might be tempted to seek other lines of credit to help pay off larger bills, but this can impact a credit score. Seeking credit card offers is a factor in the score, so avoiding doing so can help prevent bad credit. However, keeping old lines of credit open can help improve a score. While it is tempting to close the credit to avoid temptation or hassle, leaving them open is an easy way to build credit.

While paying bills on time and avoiding heavy use of credit can be difficult, they are the easiest ways to improve a credit score. It can take some work, but a better score can help negotiate better rates and terms for future debt, avoiding the pitfalls of future credit issues.