Need to raise this important figure? Follow this trio of simple strategies to get started.
Does Your Credit Score Need A Boost? Life is coming; sometimes our budgets tighten and / or our expenses skyrocket… and that pile of debt starts to pile up. This, combined with bad credit management habits, can wreak havoc on your credit score.
All is not lost, however. There are many steps you can take to improve your credit score; here are three.
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1. Pay your bills on time
Creditors don’t like it when you’re late to give them money. As a result, the credit bureaus take a heavy toll on the timeliness of loan and credit card payments when assessing your creditworthiness. Even if you only pay the minimum amount, you should still receive your payments before the due date every month without fail.
Modern life is very fast paced and full of details. As such, it can be easy to miss an important payment date. Here are a pair of proven methods you can use to prevent this from happening:
Set up payment reminders – Creditors are happy to remind you when an invoice is due. These days, credit card issuers make it easy to generate automatic reminders. These can be of any flavor – text, email, or notification through your sender’s mobile app (assuming you have it installed on your device).
Use the automatic payment service – Likewise, your creditor is more than willing to make you establish a payment without regular intervention which ends up in its coffers. Setting up a recurring, automatic payment to your creditor is usually a very intuitive and straightforward process that can be done online or through a mobile app.
Caution is called for here; make sure you have sufficient funds in the account you are paying from and ensure that payments are made on time.
2. Reduce your utilization rate
Another important factor that credit bureaus find critical is the utilization rate. This basic mathematical formula is the credit you have drawn divided by the total credit available. For example, if for all of your credit cards you have a total limit of $ 20,000 and you have made $ 5,000 in purchases with the cards, your usage rate is 25%.
Creditors like to see a figure below about 30% to 35%; higher than that and they fear that you will incur more debt than you can pay off. It is therefore up to you to keep your utilization rate below this level.
There are basically two levers you can operate to reduce the rate of use:
Reduce your debt – This, of course, is the easiest and most effective method. Be sure to pay what you can currently afford without cutting corners; your rent and other bills still need to be taken care of!
Increase your credit limit (s) – As for the other side of the utilization rate equation, increasing the overall credit limit will reduce the utilization rate somewhat. Depending on your relationship with your credit issuers and the quality of your credit profile, you may or may not have access to automatic credit increases. Otherwise, you will have to ask for a raise.
3. Correct any errors in your credit report
It is imperative that you monitor your credit score. Whether it’s through the free reports provided by your card issuer (an increasingly common benefit these days), the annual giveaway from the three major credit bureaus, or a more comprehensive paid service from one of the three, the follow-up will help you greatly. you manage your financial life.
These reports contain detailed information about your credit status and history. But agencies and creditors, like people, can make mistakes. In fact, according to data compiled by the Federal Trade Commission, about 5% of Americans with a credit history have errors glaring enough to result in higher prices for financial products.
So take the time to browse your reports when they are updated and available. If the offices have made any errors, contact them immediately to rectify the situation, the alleged error being removed from your file. All three offices have web pages where you can file disputes.
Mistakes can occur in many facets of your credit profile. These include, but are definitely not limited to:
- Accounts in your name that you have not opened or are not currently managing.
- Your live accounts that are not listed by the office.
- Unauthorized credit inquiries.
- Incorrect limits for credit cards.