You are probably here because you’ve answered the question: “Why good credit matters?” In case you haven’t, then you must be new to the grown-up world. Before we address the matter at hand i.e. how to raise your credit score and improve your bad score, here are the reasons why it matters: first of all, it influences where you live and how much you pay for the mortgage, it affects what kind of car you drive and your payment, it definitely affects the ability to start your own business, and, of course, it affects your cost of living i.e. other monthly bills. These are the most important reasons for improving your bad score. We are going to take a look at 5 ways of improving your bad credit score:

1. Keep credit card balances low
2. Raise the credit card limit
3. Leave old debt on your report
4. Pay bills on time
5. Sweet talk out of a debt

So, let’s discuss in detail how to improve bad credit:

Watch your credit card balances and don’t overuse them

How much revolving credit do you have as opposed to how much you’re actually using? This proportion, i.e. percentage needs to be as low as possible. The most advantageous percentage is 30% or lower. There are several ways to go about this. You can approach the credit card balance issue by consolidating it with a personal loan. Especially if you have a few different credit card balances. You can also discuss multiple monthly payments with the credit card issuer. Someone might have told you that you can make minimum payments and pay off your credit card debt, but Forbes doesn’t recommend this as it will take decades to sort out your balances. Be smart. Not lazy.

Credit cards

Raise the credit card limit

When opting for this strategy, be sure that you are capable of it. If you increase your spending habits, then you haven’t achieved anything. How does it work? If your credit limit is $4,000 end up every month with a bill of around $3,600, you’re using 90% of your credit! Raising the limit reduces that percentage which in turn affects your credit score. And the benefits are numerous. It will be cheaper and easier to get loans and additional credit and you can make large purchases when dire situations demand it.

Leave old debt on your report

Leaving old debt on their credit report doesn’t have to be a bad thing. Why? A debt that you’ve handled well is a good debt and, therefore, good for your credit. The longer your history of good debt is, the better it is for your score. The report will show you as a credible person, a credible debter if you will. This is how you do it: leave old debt and good accounts on as long as possible. You will need to close other accounts that shed a bad light on your credit score.

Pay bills on time

Never pay bills late. This is good advice in general, not just one that is good for your credit score. If you’re looking for ways on how to improve credit score and improve work on your good habits, listen carefully. One of the most important factors in a good credit score are on-time payments. This will show in your credit report, again, deeming you as a credible candidate. If you plan on saving for the rainy days at the expense of your bills, don’t. Strategize. Weed out the late-bill-paying habits.

Close up young woman with calculator counting making notes

Sweet talk out of a debt

No, this doesn’t mean to hustle your creditor. It just means that if you attempt to erase a debt on the basis of good credit history, you might get lucky. Write an e-mail, or do it in person. Offering to pay the remaining balance and ask the creditor to mark the account as “paid as agreed”. Emphasize your previous good credit history and ask mistakes be removed from the report. It can happen. Nothing is set in stone. However, this means that you already have a good credit history, which means you followed all the tips above such as paying your bills on time. Something to keep in mind.

There you go. 5 tips on how to raise credit score. If you have big plans for the future, then it’s high time you started sorting out your credit score.