Are you struggling with bad credit? Not having the right score can be a significant prohibiting factor in your ability to secure a home or car loan, qualify for a credit card, and much more. However, there are steps that you can take now to help to improve your credit so that you can achieve all of your financial goals. Here are a few things to consider when you are looking to increase your credit score over time.

Do Not Miss Payments

Many consumers do not realize the importance of making all of their bill payments on time. Your payment history is one of the most critical factors that go into calculating your credit score. This makes it imperative that you make every effort to pay all of your bills when they are due.

One of the easiest ways to make sure that no bills fall through the cracks is to set up automatic payments. If you are experiencing financial hardship and cannot pay the bill on time, it is recommended to reach out to the creditor to ask about an extension. You may be surprised at how willing they are to work with you if you only ask them. If you are currently behind on any bills, you will give your credit score a boost if you are diligent about bringing them current.

Limit New Accounts

Too many inquiries into your credit is a surefire way to lower your overall score. Although you need to open accounts to build your credit, you also need to be mindful about limiting how many hard pulls your score receives. An excess of inquiries signals that you are looking to open more credit lines which can be a warning flag for some lenders.

Note that the exception to this is when you are shopping around for rates on car or home loans. This type of shopping is not recognized as a risky behavior by lenders, thus your score will not be penalized for it. This is particularly true if the inquiries all happen within the span of a few weeks.

Know Your Options

It is important to understand that bad credit does not have to limit all of your purchasing power. Understanding all of the options available to you even with poor credit can ensure that you make the best choice for your specific needs.

For example, you may still be able to qualify for a VA loan with bad credit. If you are a veteran with a less than stellar credit record, there are still loans available to you. The best news is that these options also offer some of the most competitive rates that you will find. These types of programs may finally put you into that dream house or qualify you for that loan that you have been needing.

Build Positive Credit

In addition to avoiding the warning flags of bad credit, you also need to be proactive about building positive credit. This means that you need to own several open accounts that you have demonstrated responsibility for managing.

If you are currently dealing with poor credit, you may need to start with a secured card that is designed to help you build your credit. Another way to build your credit if you cannot qualify for anything on your own is to be added as an authorized user to somebody else’s credit card.

Pay Down Revolving Balances

While this is easier said than done, it is imperative that you pay down revolving account balances if you want to improve your credit score. This is true even if you are not behind on our bills. Having a high balance on revolving credit accounts signals that you may be using too much of your available credit, making you appear to be a risk to some lenders.

Revolving account examples are credit cards and lines of credit. This makes it important that you maintain as low of a balance as possible on these types of accounts.

Understanding these five tips will give you the knowledge and the tools that you need to improve your credit score. In turn, you will be provided with more options when it comes to loans and other important financial accounts that you need for security.