A good credit score is like a good health record. It shows your financial health and all the factors that affect it. With a good credit score, you make your life more affordable, save money and you are able to get loans at the best terms. But just like with your health, you mustn’t be reckless with your credit score either.
Your credit score includes a number of different factors such as your payment history, how much credit you have and the length of credit history. To keep your credit score at a high and healthy level, you need to pay attention to all these factors and always make sure that you balance them effectively.
Here is a list of the best five ways to improve your credit score in 2019.
Regularly check your credit report
There are some credit score killers that you cannot prevent, one of them being identity fraud. But there are a number of things that can be successfully prevented by regularly reviewing your credit report.
If you spot anything strange on your credit report or you can’t remember that you applied for something, contact a credit bureau to check for any suspicious activities.
When you have good credit, you will find it much easier to qualify for loans and credit cards. But to have good credit, you need to learn how to read your credit report and regularly check it. That way, even if you have bad credit, understanding your report will help you identify where your problems lie and how to solve them.
You can ask for your credit report at each of the three major credit bureaus: Equifax, Experian and TransUnion.
Pay your bills on time
Every now and then, you probably try to put some money on the side to make a big purchase, invest it or simply to have a cash buffer in case of an unexpected event. And while you are trying to save, you may get tempted to miss one or two monthly bills thinking it’s not a big deal.
But it is. Your credit score depends on what is in your credit report, and if you fail to pay your bills on time, you will hurt your credit score.
Here are some things you could do to prevent late bill payments:
- sign up for auto-pay
- consolidate bills
- use financial software with automatic bill-paying reminders
- schedule bill-paying time
- organize bills according to the due date
- know your bill cycle
- sign up to receive bills or reminders by email
Stay away from payday loans
Applying for payday loans is not something that a majority of people does, but those who do apply for this type of loan can easily destroy their credit score for good.
If you have bad credit, they may be attractive to you since these lenders don’t check your credit report. But there is a good reason they don’t do it.
These predatory lenders want you to borrow money from them just so they could get you into a debt cycle. The APR on payday loans is insanely high – up to 400%. And if you are not able to pay off the entire amount (loan plus rates) on your next payday, you will have to pay the rates only. But that is not the end of your troubles – on the next payday, you will still have to pay down both the loan amount and the rates.
This is how people get into a debt cycle and seriously harm their credit. If you want to avoid this, steer clear of payday loans.
Be careful with credit cards
If you have no credit cards, apply for one. If you use it responsibly, it will help you improve your credit score.
On the other hand, having a wallet stuffed with credit cards is not a good idea. The more credit cards you have, the harder it will be for you to control how much you spend.
In addition, a major factor in your credit score is how much revolving credit you have compared to how much you are actually using. You want to keep this ratio at 30% or lower, and to do this, you need to pay down your balances and keep them low. You can learn more credit card tricks that will improve your credit score here:
Also, eliminate all small balances that you have on a number of credit cards. Remember, that is why you shouldn’t have a big number of credit cards. Using debit cards instead of credit cards is a great financial strategy.
The best solution would be to gather up all those credit cards with nuisance balances and pay them off. After that, you can leave one or two cards that you will use regularly.
Apply for credit (but only when you really need it)
If you need a financial infusion, don’t hesitate to apply for credit, be it a credit card or a loan. It is much better to take out a loan if you know that you can pay it off than to be too frugal about your budget.
On the other hand, don’t apply for loans while you are still researching. This is a common mistake people make because they hope that they will have better chances to get a loan if they apply for more loans. And this mistake costs them the points reduced off their credit score.
Each time you apply for credit (personal loan, car loan, credit card), lenders perform a hard inquiry on your credit report, which decreases your credit score.
If multiple hard inquiries are made to your credit report in a short period of time, you will substantially damage your score. To prevent this outcome, only apply for credit when you actually need it.
Improving your credit score and keeping it at a high level is not an easy thing as it requires both time and energy. But if you don’t do it, you will lose a significant amount of money in the long run.
So, at the end of the day, it is up to you to decide which of your resources will have to suffer. We definitely recommend that you invest your time and energy into improving your credit score because you will lose them nonetheless when your bad score starts harming your lifestyle.