Top Five Ways to Improve and Maintain Your Credit
Always Pay Your Bills on Time
This may seem like an obvious point but keeping current on your bills will improve your credit score. If you aren’t current and missed a few payments, catch up as fast as you can and make those monthly payments on time, every time. Contact creditors if you’re having trouble making ends meet – some companies have hardship policies or deferral allowances. If you’ve invested in a payment protection plan, this can help. Creditors will usually try to work with you, and certainly prefer that you try to contact them rather than mutely stopping your payments. If you have trouble remembering when payments are due most accounts allow for auto-payment to be set up so you never miss a payment. You can also use your calendar to set reminders of when to make those payments.
Open Accounts as Needed
Don’t open a large number of credit lines you don’t need. Rapid account build-up not only affects the average age of your credit history, but also looks risky to potential lenders. Managing a few credit cards or an installment loan responsibly looks far better. Try to avoid the “too much too quickly” scenario, especially if you’re a new credit holder trying to build your score.
Check Your Report
Visit your credit report regularly to make sure everything is in tip-top shape and there aren’t any errors present. Dispute any errors as soon as you find them. Check your credit limits to ensure they’re reported at the proper amount and not lower than they should be. Be aware of how inquiries, opening and closing accounts affects your score. This is knowledge that will help you at every stage of your credit management. We would gladly take the time to explain to you how the different changes effect your credit score. And keep in mind: requesting your report won’t ding your score if you order through the official companies providing the reports or through someone authorized to do so.
Keep Your Balance Low
Use the 30% rule. Maxing out your cards looks risky. Keep the balance on your revolving credit low – at 30% of the available limit. The idea here is to under-use your credit cards. Never spend more on the cards than you can afford to pay. And if you’re experiencing a financial hardship like unemployment, use your cash on hand instead of your credit, no matter how tempting the latter may seem.
Improve Your Spending Habits
There are many sites and budgeting apps available to help you examine and refine your spending habits. Mint, BillGuard, Expensify and the like are all very handy tools for budgeting your money and tracking expenditures. With these, you can also create payment reminders or, in certain cases, set up an autopay system. These tools enable you to see with great precision where and how you can improve and will help you keep your bills current.
Following these tips should help you along the path to repairing and improving your credit. The number one point is to realize that your credit score is repairable and manageable if you have the correct tools and knowledge. If you still feel overwhelmed, contact a representative at Prime Standard for your free consultation and discover how we can help.