Have you ever been in a fix and needed some credit extended your way? Only to find that you are not eligible or can only access half the amount you need? That is what a bad credit score does to you. It limits your financial options. Good credit, on the other hand, opens you to a world of opportunities. You can get the best credit cards, low-interest rates, and even a job because of a good credit score. Being in control of your finances is very liberating. If your credit score is not where you would like it to be, there are a few steps you can take to make it better.
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Pay your bills on time
How well you pay your bills reflects on your credit score. Ensure you are always on time to offset not only your loans but your utility bills too. If you are consistently late on your payments, valuable points will be knocked off your credit score. You can set up systems to help you stick to your payment schedule. Email, text notifications, and automatic bill-pay are just a few of the methods you can put in place.
Do not use all your credit
Did you know that if your credit utilization ratio is more than 30%, then your credit score is negatively affected? Always aim to keep your ratios low and only use the credit card when it is necessary. Instead of using credit, you can choose to pay using the debit card or cash. Paying down your debt balances or consolidating them can also help with lowering your ratio.
Do not close unutilized credit cards
So long as the card is not racking up any fees, it is smarter to leave them open. You are safer having several credit cards that are not used often than having one that is always incurring high debt. Carrying the same credit cards over a long period is evidence that you are responsible with debt. Closing a credit account works to your disadvantage because it makes you seem new to the credit system.
Stop applying for too much credit
Minimize how often you apply for credit because it creates a hard inquiry on your credit report. Opening a new credit card boosts your credit limit, but when you apply for too much credit over a short period, the result is a negative score. If you are serious about your desire to improve your credit score, you will resist the temptation to borrow. This step is vital. Instead, look for ways to earn extra income so you don’t have to borrow.
Be vigilant with your credit report
Ensure you check your credit reports every month and report any inaccuracies you encounter. If the information in your credit reports is wrong, it could negatively affect your score. Take advantage of the free monthly statements that are sent by your credit card company. You can choose to get notifications if there is a significant change in your credit use.
The journey to improve your credit score is not comfortable, but it is doable. Be patient and apply the strategies above, and you will start enjoying the fruits of a good credit score.
