family and money
Little Tricks to Improving Your Credit Score
It’s kind of insane how much your credit score affects the quality of your life and your future plans. Three little numbers that so much hinges on! Bad credit can prevent you from buying a home, buying or financing a car, and even keep you from getting a job. Considering that one bad month can tank your score for years, that’s a tough pill to swallow! But you don’t have to sit on your bad credit and wait for it to improve. Here are some easy tricks and tips for improving your credit score.
Raising your credit score isn’t going to happen overnight. But one simple way you can improve it over time is by paying your bills on time!
It’s really that simple. Consistent late payments on your lines of credit can knock serious points off your score, which then affects everything from big purchases to taking out loans or refinancing the loans you already have. On-times are one of the biggest factors when it comes to a good credit score. So if you have a hard time remembering what’s due and when, it’a a good idea to use some sort of calendar or reminder system to keep up with everything.
Sure, most people know their score (ish). But make it a point to review your credit report regularly, so you can spot errors right away.
Disputing errors with credit agencies is the quickest way to boost your score. It’s easy to do, and it can seriously impact your credit report. As soon as you report wrong or false information to credit reporting agencies, it can be removed, and your score will improve immediately.
Keep those credit card balances low.
Your debt to credit ratio is pretty important! Even if you make your payments on time and follow all the other rules, if you are carrying a bunch of cards with high balances, that’s going to reflect negatively on your credit score. Try to keep your debt to credit ratio at around 30% or lower. Even if you pay off your balance every month, your ratio could be higher than you’d expect. That’s because your balance is reported monthly, so your score still weighs what’s on your statement, rather than the zero balance you’re about to have. If you can, split up your payments throughout the month, rather than paying it all off at once at the close of your statement.
Eliminate as many card balances as you can, but don’t close the cards!
Obviously, carrying a balance on all of your cards is not the way to go. If you’ve got a bunch of credit cards with small balances, pledge to pay off one or two every month. This will improve your debt to credit ratio, and it looks a lot better to credit agencies.
But once you pay off those small balances, don’t close the accounts! Even if they’re cards you don’t use much anymore. If your debt was paid off in good standing, that’s good debt, and good debt (even if it’s paid off) is good for your credit score. One of the things that factors into your score is your credit history, so you want your good credit history to stay on there as long as possible.
See if you can qualify for a 0% interest credit card, and transfer balances to one card.
Again, this will help your debt to credit ratio, and all that good credit stays on your report, boosting your score. Then, you can put all those little payments toward paying down your big balance card in a timely manner. Plus, with 0% interest (or even a low interest rate), you won’t be paying so much in interest every month.
If our lives are going to be controlled by these damn credit scores, we may as well do what we can to make sure they’re good, right? These tips and tricks can help boost your score, and put you in better financial shape for the future. But don’t do all this work and then blow your wad on something big.
(Image: iStock / BernardaSv)