As the new year draws ever closer, many of us are brainstorming New Year’s resolutions to uphold. Perhaps you’re ready to lose those few pounds, or maybe you want to become a more avid reader, but have you taken a look at your credit score? Sure, the more common New Year’s resolutions tend to bring a newfound sense of health, but improving your credit score can resonate positively throughout every aspect of your life. And we’re not saying you have to choose only one resolution, you can still try to read three books per month. We’re simply saying that it might be a good idea to take improving your credit score in stride. By following these simple tips, you’ll be able to reach the coveted “excellent” credit score.
Make Sure to Pay Your Bills on Time
This may seem like a no-brainer but it’s easy to slip up. Perhaps you’ve fallen into the habit of paying your bills whenever you felt like it, even if it meant missing the due date by a few days. This is a bad habit you’ll want to break as soon as possible. Not paying your bills on time is a big red flag for lenders, since they want to know if you’re reliable enough for money lending.
A great way to pay your bills on time is by scheduling them ahead of time, instead of waiting to pay on the day they’re due. Most bills, from utilities to car payments, have the option of sending you email reminders as soon as your next month’s bill is ready. Instead of ignoring these emails, click on them and set up the payment beforehand. This way, even if you forget about the due date, your payment will still go through on time! Make sure to have enough money in your account so the payment goes through without a hitch.
Maintain a Healthy Credit Utilization Ratio
A credit card is a careful balancing act. One shouldn’t overuse their credit card, but one should also avoid not using it. Using your credit card and paying off any charges on a timely basis will build up your credit utilization ratio. This way, lenders will be able to see how responsible you are. If you have a high balance on your credit card and you keep making purchases without cutting down on the balance, then your credit score can be put in jeopardy.
If you’ve struggled with high credit card balances, make a plan to pay it off as quickly as possible. This way, you won’t incur extra interest charges. If the issue becomes too great, it might be a good idea to look into a balance transfer. By transferring your balance to a new card with 0% APR financing and low or non-existent balance transfer rates, you’ll be able to pay off your balance without worrying about incurring extra charges. Do so carefully, however, and plan accordingly. You could perhaps save enough money before opening a new credit card so you’ll be able to pay it off as quickly as possible.
But what happens once you pay off your credit card? Your initial thought may be to close the account and rid yourself of the stress, but that might not be the best path to take.
Don’t Close Old or Unused Credit Cards!
In addition to looking at your payment history, lenders are also keenly interested in the history of your credit. Credit history basically refers to the amount of time you’ve had credit, including credit cards. All too often, credit card users close their accounts as soon as the card is paid off. Although this may seem like the “right” thing to do, it’s actually very detrimental to your overall credit score. The longer you have an account, the better your history looks. When you close an old, rarely used account, all that history goes up in smoke. Instead of shutting down that account, keep the card safely hidden somewhere (perhaps your nightstand or in a scarcely-seen part of your wallet) and make a purchase or two every once in a while using that card. This will ensure that your older credit card account remains active, extending your credit history!
Don’t Let Inaccuracies Slip By
There are countless things you can do to make sure your credit history and your credit score are in tip-top shape. But there are also things that can occur that are out of your control. It may seem impossible, but inaccuracies can crop up from time to time. Whenever you receive a credit score from TransUnion, Equifax, and Experian, the three credit reporting bureaus, pay close attention to the details. If something seems off, don’t hesitate to have it taken care of. These inaccuracies can negatively impact your credit quite quickly. If you’re not sure what to look out for or you simply need a bit of assistance, then New Credit Life can help!
Why Having Good Credit Score Matters
Whether you’re trying to rent an apartment, get a home loan, or buy a new car, lenders take a look at your credit score to determine whether you’re trustworthy or not. Doors can close if you have a less-than-desirable score. But fret not, with our help, you’ll be back on your feet and your credit score will go from red to green in no time. Give New Credit Life a call today to learn more!