In this country, there are two things that can make or break you. And that is your personal judgment and your credit score. The latter is so crucial that it will determine whether you will ever become a home owner, and nowadays it will even determine if you will get that dream job you have been chasing ever since college graduation. The credit score is that pesky little number that strangers use to determine who you really are. And rather we like it or not, the use of the credit score will not disappear anytime soon, despite the economic recession.
If you are one of the unlucky ones who happen to have a low credit score, don’t be too quick to write off your future. Regardless of how the lenders may shun you and the disappointments on your credit report, you too still have a chance to fix things. Here are a few simple things you can do to improve your credit score.
1. Begin to pay down your credit cards and limit your use of the plastic.
Years ago, we all thought credit cards were the answer to our financial woes. Now as we suffer as a nation in one of the worst recessions in history, we know that credit cards were only the cause of our financial woes. One of the biggest reasons credit cards are so dangerous is because they are so addictive. You might originally get a credit card for emergency purchases, and a year later owe more money than you can actually afford for purchases you should have avoided.
When it comes to your credit score, paying down credit scores improves credit scores faster than paying off mortgages and other loans. The best way to make lenders happy is to have a rather big gap between your credit limit and how much you are using. Get your balance between 30% of the credit limit for each credit card.
Once you begin to seriously pay down your cards, it is time to tackle the addiction to the plastic. Contrary to belief, big purchases are dangerous to your credit score regardless of whether you pay the balance in full in a month or not. Why is this the case? It’s simple, the credit bureaus look at the balances reported on your last statement. Huge balances just aren’t attractive to the bureaus. Again, 30% is the magic number. If you limit your charges to 30% or less than the credit limit, you can increase your credit score.
2. Pay your bills on time, every single one of them.
We all have bills and I’m sure we all wish we really didn’t. But paying off your bills can help your credit score in more ways than you know. The credit bureaus check to see if you are paying your bills on time, and those that do are rewarded for the responsibility. And what’s a better reward than a higher credit score? Get organized in your payments, and you will see a much higher credit score.
3. Stop making minimum payments.
Making the minimum payments may seem like a great option, but it is hurting you more than you realize. Although you may get to keep more money in your pockets by making smaller payments, always be sure to pay more than the minimum payment on your credit cards. Bureaus love consumers who aren’t afraid to give more than the minimum. And if you’re trying to pay off a credit card, minimum payments are to be avoided at all costs
4. Get a credit report.
No one’s perfect right? So why would you expect the credit bureaus to be? They make mistakes too and the only way you can catch them is to get a credit report. Use your credit report to make sure that you don’t have any misleading information in your credit history. There have been many cases where people found creditors that they didn’t even owe on their credit reports. If you see any mistakes, contact the credit bureaus immediately.
It will not be an easy task to improve your credit score. It will take time and conscious effort, but it can be done if you are serious about improving it. Be warned that there are many companies out here that claim that they can improve your score, and honestly, only you can fix your credit score. No company can help you, and the credit bureaus also advise consumers to stay away from these types of companies. 99% of credit repair companies are scams and won’t make good use of your personal information. Keep your money in your pockets, and independently improve your credit score. Follow these steps and you will see a drastic change.