In today’s world, a credit score can mean everything. Having a good score can make the difference between whether or not you get a car, whether you get a house, and sometimes even whether you get a job. That’s why it’s so very important to make sure that your credit score is as high as possible and work to improve it should you find yourself in a bad position. Fortunately, there are a number of ways that you can improve that score.
1. Get rid of small balances and consolidate – One thing that hurts a lot of people is not so much having a lot of charges on a card, but having a lot of charges on a lot of cards. A $30 charge on one card and a $40 charge on another looks worse than a $70 charge on a single card. By cleaning up the smaller balances and trying to use only one or two cards most of the time, you can immediately start improving your credit score.
2. Don’t worry about old good debt – A lot of people who have paid off a debt immediately start making calls in order to have the debt removed from their record. The idea seems to be that the less debt of any kind that is on a credit report, the better. However, that’s not the case: a record with no debt has no credit. If you have paid off a debt and have a good payment history, leave it on your credit report as it will actually help you significantly.
3. Be quick about applying for a loan – When you’re looking for a loan, generally multiple credit checks will result in a dip in your score. This happens because it’s assumed that you’re looking for credit, which will change what you have available to you. Fortunately, rating agencies realize that if you’re shopping for a home, a car, or student loans, you’ll likely have multiple credit checks as you shop around for the best rates. This is responsible behavior, so you have 30 days to actually take out a loan for the check not to count against you. This way you can have multiple checks but only take out a single loan.
4. Don’t prioritize down payments over paying bills – Far too often, people will save for a down payment on a large item like a home or a car and let their bills slip into arrears in order to do so. The problem with this is that paying your bills on time is one of the best ways to raise your score, and paying them late is one of the best ways to let it fall. Even if you’ve managed to accumulate a great down payment, you may still not be able to buy that big item because your credit has fallen too low. Only save what you can when you can.
5. Don’t worry about your score – Most of the time, you don’t need to know your credit score. The fact of the matter is, it only comes into play at a handful of very important parts of your life, and then can disappear. For the most part, you should only really check it sporadically when you know you have a big purchase coming up. Another thing you may want to do is take advantage of the three free credit reports you can get from AnnualCreditReport.com. You can get one every year from each of the three reporting agencies. If you really want to be clever, you can stagger them every four months and get regular updates on where your credit is.
If you’re really concerned about your credit, you can always find a good adviser who is willing and able to help you navigate the somewhat complicated world of credit scores. The trick is to keep an eye on them, but don’t obsess. Rather, mark it on your calendar the days you plan to order your score, then just forget about it until then. Take some time to look when you get it and make a plan, then move on with your life. Credit scores are important, but if you take care of your bills and hold on to the good marks on your record, you should have no trouble maintaining a positive score.
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