For many people, looking at their credit score can be a daunting task that they have a tendency to put off for as long as possible. Missing multiple bill payments, racking up large balances across credit cards, and applying for new credit cards you don’t need within a short amount of time will surely hurt your overall score. The first step in fixing the problem of having a poor score is to know exactly where you stand by checking your FICO credit score every quarter. Keeping yourself informed will allow you to actively take steps that will move the score to a more favorable number. It’s important to know that there are small changes you can start making today that will help you build up your score over time.
Look at your credit card balances
Keeping large balances on your credit cards, regardless of whether or not you’re paying on time every month, will hurt your overall score. It’s best if the balance on your cards is 30% or less of the total available credit line amount. If you can afford to increase your monthly payment amount, this is a great option. Another alternative would be to speak to your bank or credit union about opening a personal loan with them, depending on what interest rate they are able to offer. A personal loan through a bank will pay off the credit card balance and allow you to pay the balance on a lower interest rate plan, helping you to pay down the principal balance. If you are close to having 30% but not quite there yet, you could also talk to your credit card company and request a credit line increase so that it’s closer to that percentage.
Keep track of credit applications
If you are planning on buying a house or car, or are applying for a student loan or credit card, you will have to have your credit score checked by these institutions. Every time you put in a request for credit, your score will take a little hit.
Pay on time
If you have a tendency to pay your bills late, get control of your billing schedule. Instead of missing another bill and having to pay the late fee and getting a negative mark on your credit score, consider signing up for automatic bill pay for your credit card and student loan payments. If you’re having trouble making these payments because they’re too high, call these companies to discuss repayment options. They may be able to reduce your payment amounts for a time so that you can at least get them in on time.
Don’t charge unless you need to
Just because you have available credit, doesn’t mean you should be using it. If you’re able to use cash or a debit card to make purchases, this is going to be your best option if you already have a lot of debt. Using your credit card often and for expensive purchases is going to sink your score lower and make you look riskier to credit bureaus.