Remember when you were young and not so responsible with that credit card you were approved for? The shopping sprees every month, the going out and partying with friends or those shoes you just had to have for your birthday? Or for the vast majority of us, SALLY MAE! (Cue horror film screams in the background). Well those adolescent-like, irresponsible charges often comeback to haunt us all. As adults, we want to make the essential life purchases like a welcoming home, a reliable vehicle and so on. If your credit score isn’t up to par, then chances are you’re going to have a hard time buying or receiving a loan to make those purchases. Here are a few tips on how to build your credit and avoid the horrific DENIED judgement.
Keep an eye on your balance
We’re all super busy adults, doing super busy adult things like managing our work responsibilities, making sure the kids are all set for school, keeping your home up and running, and if we’re lucky, catching up on our favorite television series now and then. With all that running around, it’s very easy to forget a bill or two, especially that credit card bill and the balance on it. One of the simplest ways to improve your credit score is to watch your balances. To help boost your score, pay down the balances and keep them low. A key factor in your credit score is how much revolving credit you have versus how much you’re actually using. The smaller that percentage is, the better it is for your credit rating. Even if you’re paying balances in full every month, your credit score could still weigh your monthly balances because some issuers use the balance on your statement as the one reported to the bureau. So, if you can, try to pay the credit card issuer more than once throughout the month to keep your balance low.
Leave old debt on your report
I know, I know, it sounds crazy to leave “old debt” on your credit report when you’re trying to build good credit. But that’s just it, old debt can become good credit! How you say? Because if you’ve paid that debt off with a good payment history, it works in your favor –that’s how. Trying to get rid of good debt is like earning a 4.0 GPA your senior year in high school but wanting it removed from your record just because you graduated 15 years ago. It’s considered good debt –debt that you’ve handled well and paid as agreed –and it’s good for your credit. The longer your history of good debt is, the better it is for your score. Obviously, negative items will affect your score negatively but pushing to get that car loan off of your score the moment it’s paid off is not the way to go. A helpful hint to improve your credit is to leave the old debt and good accounts on your score as long as possible.
Pay your bills on time
Probably one of the most no-brainer, but sometimes incredibly difficult things to do that’ll help raise your score, is paying bills on time. Again, as adults, we’re often distracted by the million-and-one things we have going on in our lives simultaneously. Contrarily, part of being an adult, is being responsible, and paying attention to paying bills is as responsible as it gets. Credit scores are determined by what’s in your credit report. If you’re bad about paying your bills, or paying them on time, it damages your credit and hurts your credit score. If you’re the easily distracted adult like myself, don’t be afraid to go all out to get the job done; set alarms, mark your calendars and set personal payment plan reminders. While you’re juggling other bills, you don’t want to start paying bills late. Even if you’re sitting on a pile of savings, a drop in your score could damage great deals on purchasing a home or financing a vehicle.
Having a good credit score is imperative to anyone, but especially the average person just trying to make a better life for themselves and their family. Hopefully these tips will encourage you to make improvements to your personal score. If you need any other tips and/or reminders on how to help improve your credit score, log in today.