With so many credit score commercials, advertisements and more, most people already know the importance of a high credit score. Most don’t really pay much attention to it though until a major purchase is on the horizon, such as home buying. So how can a low credit score improve? Here are my three favorite tips that actually work for everyone as long as they put in the effort.
There is always a fine line when it comes to handling credit cards in general. In order to build credit, a person must use credit, and a credit card works wonderfully in that regard. However, taking out too much credit, or not handling the balance properly, can cause a credit score to take a hit.
For the most part, people should aim to ideally only use about 30% of their credit available at a time. There are times in life where that might change a little bit, but working the percentage down can really help out in a lot of ways.
If a credit card balance gets too high, it can make a person look like they don’t really know how to handle the amount of credit they have. Lenders don’t want to feel as though a person might be a risk to their company.
Responsibility plays a big role in anyone’s credit score. That means paying bills on time, not ignoring bills and just stepping up to the plate and owning all debt accumulated. It can really be tough at times, and that means extra planning might be needed to ensure that enough money is available to pay bills. Staying on top of the bills can get that credit score back into a respectable range fairly quickly.
Many might think that paying bills on time is only related to debt. That is simply not the case. In fact, something like getting credit for utility bill payments, cell phone payments and more can help in the long run. At the same time, avoiding something as seemingly innocent as returning library books on time can actually hurt a credit score if they decide to report it.
Lenders trust responsible people who seem to carry minimal risk. Even if the balance is a little high, making timely payments can go a long way towards getting everything back in order.
It can be a bit overwhelming the first time a person is denied credit, or simply sees a credit score that is less than ideal. No one wants that feeling. However, the one way it definitely will not be repaired is if it is blown off and ignored. From that day forward, be proactive about the credit score repair, and put a plan into place.
Perhaps the best motivator is simply checking the credit score frequently. This is sort of similar to weighing in while trying to lose weight. A person can check their credit score with any of the three credit bureaus for free once a month. That means, if staggered, a person can check one of Equifax, Experian, or TransUnion once every four months. Seeing progress can help motivate going forward. There are also other free tools out their like Credit Karma, that allows you to check them at any time without affecting your credit score.
Cutting back on frivolous purchases and staying focused is the best way to responsibly get back to a solid credit score. If tempted to try to open yet another card, do whatever possible not to. This will likely not improve a credit score, since it will be creating more hard inquiries. Not only that, but another credit card will just make it that much easier to spend.