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Four Tips For Improving Your Credit Score

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Credit scores are an important part of life and can greatly influence the livelihood of people.

Credit scores are established through payment history, credit utilization, length of credit history, types of credit in use, and new credit.

Due to loans taken out or having debt on credit cards, credit scores can often be low. Low credit scores make it hard to be able to apply for credit cards or get loans when money is needed.

Ontime Payments

One of the ways people can improve their credit scores is by making sure to pay their payments on time.  Payment history makes up a good chunk of the credit score itself.

One way to make sure payments are made on time is by writing down on a calendar when the bill is due. Also, a reminder can be put on the phone to make sure to pay a bill.

Also, some companies allow customers to opt into a text service, which will provide a text as a reminder to pay the bill. It is just as important to pay credit card bills as well as normal utility bills on time.

Open up new revolving accounts

Credit scores can be improved by opening up a new credit card and keeping it open.

As long as there is no annual fee involved when it comes to the credit card, there is no reason to cancel the card.  This will help with the length of the payment history component of the credit score.

It is just as important to make sure to be using the credit card once in a while because it might be closed due to non-usage.

Along with usage, it is just as important to make sure to be able to pay off the credit card purchases in a timely manner. It is very important to make sure not to open up too many credit cards because that is not helpful to improving the credit score.

Manage debt

Credit scores are greatly influenced by any debt that is accrued over time.

Everyone knows there are interest rates on loans and credit cards. These interest rates become steeper and make it hard to pay back the longer the balance goes unpaid.

When there is debt involved, people tend to try to pay off the debt by opening other credit cards or taking out more loans. This might seem like a great idea at the time, but often times the new loans end up being even harder to pay off later on.

The best thing to do is put aside certain money each month as part of the budget to pay off the debt. By doing this, the debt will slowly be paid off without adding on any more debt or loans, which will have to be repaid later.

It is important to plan out a budget of all the expenses and to make sure to include a portion of the money toward debts or loans involved. Also, people should pay off any loans or debt in small amounts without letting the balance continue to stay open.

Monitor credit reports for errors

Although credit scores are circulated every day, there can be errors in the calculation itself. It is important to double check to make sure no error were made when calculating the credit score.

There are many online sites, which could give the credit score and if any errors are present, they can be disputed. Sometimes due to these errors, credit scores can be affected without actually having any actual debts.

Credit card companies often put credit limits on credit cards based off the credit score. By continuing to make payments on time and leaving the credit card open, credit card companies will be willing to create a higher limit.

It is important to make sure customer’s spending habits don’t change as well even though the credit limits change.

Photo: Mighty Travels / CC 2.0