Improving your credit score without paying more towards arrears can be challenging, as paying off debts is one of the most effective ways to boost your credit. However, here are some steps you can take each month to gradually improve your credit score:
1. Review your credit report
Obtain a free copy of your credit report from each of the major credit bureaus (Equifax, Experian, and TransUnion) and carefully review it for any errors or discrepancies. Dispute any inaccuracies you find, as they can negatively impact your credit score.
2. Pay bills on time
Ensure that you pay all your bills, including utilities, rent, and other monthly payments, on time. Late payments can significantly harm your credit score, so setting up reminders or automatic payments can help you stay on track.
3. Reduce credit utilization
Aim to keep your credit card balances low, ideally below 30% of your available credit limit. High credit utilization can negatively impact your credit score, so consider paying down your balances or requesting a credit limit increase to improve this ratio.
4. Avoid new credit applications
Minimize the number of new credit applications you make, as each application typically results in a hard inquiry on your credit report, which can temporarily lower your score. Only apply for credit when necessary and be selective about the applications you submit.
5. Maintain old credit accounts
Keeping old credit accounts open can positively impact your credit history and overall credit score. If you have old credit cards with no annual fees, consider keeping them open even if you don’t use them frequently.
6. Diversify your credit mix
Having a mix of different types of credit, such as credit cards, loans, and mortgages, can positively impact your credit score. However, only take on new credit if it aligns with your financial goals and you can manage it responsibly.
7. Become an authorized user
If you have a trusted family member or friend with a good credit history, ask them to add you as an authorized user on one of their credit cards. Their positive payment history can potentially benefit your credit score, but ensure that they maintain responsible credit habits.
Remember, while these steps can help improve your credit score gradually, paying off arrears and reducing outstanding debts should still be a priority.
