Five ways to improve your credit score.
While there are many factors that play into your credit score, and I won't go into all of them in this post, here are five ways to improve your credit score that I feel are the easiest ones to manage. These tips do not cover every situation, and I know everyone's personal experiences and/or struggles with money are specific to them, but this is a very broad synopsis.
Manage your revolving debt.
One of the factors that play into your score is your credit behavior when it comes to revolving debt. Revolving debt is anything that does not have a specific payment assigned to it. An example is a store credit account or a credit card. These types of credits only require a small monthly payment and plan on you not paying off quickly and thus earning the company's a lot of interest. The credit bureau looks at the percentage of credit used and available. The ratio is considered your utilization rate(Example is you have a limit if $1000 and your balance is $500, you are at 50%) and typically they like it to be under 30%. One way to improve this would be to ask for an increase in your line availability, but the best way is to pay the lines off each month or at least below 30%.
Don't shop for things until you are ready to buy.
Everyone likes the look of a shiny new car and test driving is nice. The problems come when you are shopping but not ready to seriously purchase. The salesmen is going to say, "let's run the numbers." Which means they will pull credit. At any one dealership, they may send your information to several financial institutions who will all run your credit. Any inquiry on your credit report will impact your score so the more inquiries, the greater the impact. The same can be said about store cards such as Best Buy, Kohl's, and Target. These offer you great discounts for signing up for credit and I have even used them in the past, but they will impact your credit. Remember up above when I told you about the available credit? Let's say you go to your favorite electronics store and apply for the store card. You want to buy a new tv and by signing up you can save 5% on all purchases. The store approves you for a $2,000 credit card. The TV cost $1,900. You have now utilized 95% of the card. If you are disciplined with these types of cards they can give you great discounts, but they can also put you in financial despair rather quickly.
Make sure you pay (all of your bills) on time.
Do you remember that time you went to the dentist and forgot to pay for the balance of your bill? Of course you don't, which is why not your credit report shows a delinquent bill in the amount of $45. You are probably sitting there thinking, "how could someone forget that small of a bill". Let me tell you. I see it all the time. It's not that people are deliberate about not paying bills, they just forget. Most of the time, companies are quick to remind you to pay. But if you are dealing with a large corporation, they don't have time to chase bills so they send them to a collection agency. Whether it is $45 or $4,500, it still impacts the credit report. My advice is to pay at the time of service to avoid this issue.
Check your credit report often
With all of the news about information breaches, you can never be too cautious about your personal credit history. The latest being the Capital One breach which you can read about at https://www.capitalone.com/facts2019/. There are several services that can help you monitor your credit, which you can find by doing a quick google search. One of the best ways to protect yourself is to do a credit freeze which means that no one can access your credit. This is a good option if you don't plan on making any financing purchases in the near future. You have to contact the three credit bureaus separately, which takes time but then you will be protected.
Live within your income
This is not really a tip to improve your credit score, but it will help to keep it from going off a cliff. I know this is the hardest thing someone can do in today's world. There always appears to be, as Jim Rohn put it, "More month at the end of the money." The gadgets are more expensive and there are more of them. Prices for normal things continue to increase at a more rapid rate than wages. I didn't profess that this was going to be easy at the beginning of the article, but I do believe it is possible. In a separate post, I may go into my particular situation and how I have overcome these trappings. Yes, I too once had much debt on revolving cards. I liked everything fast, shiny, electronic, and expensive. Since then, I have learned some of these tips above as well as the importance of managing money well and, in turn, a good credit score.
Thank you for taking the time to read my blogs. I am in no way a subject expert and these are simply my opinions. I welcome any thoughts and discussion.
