We may be 1 month into 2018, but it’s not too late to add another resolution: improving your credit. Take these 4 simple steps to improve your financial standing, and give you more peace of mind.
Check your credit report, and make sure it’s accurate. Believe it or not – credit reports can, and often do, have mistakes on them. According to the Fair Credit Reporting Act, you’re entitled to a free copy, once a year, of all three of your credit reports (Experian, Equifax, and TransUnion.)
When dissecting your report, it’s incredibly important to make sure that all of the information is accurate, because if there is a mistake, you’re credit score will reflect it.
Most credit scores operate within a range of 300 to 850:
Excellent Credit: 750+
Good Credit: 700-749
Fair Credit: 650-699
Poor Credit: 600-649
Bad Credit: below 600
Determine what you need to improve. If your credit report is accurate, but you still have a score that could use some improvement, it’s important to understand why. A glitch on your report could be for a variety of reasons, like: payment history, amount of debt, age of accounts.
Focus on what you need to improve. If you have outstanding debts, and have a routine of making the minimum payment, change it up. A great way to decrease your debt and improve your credit is to pay twice a month. For example – if you have a credit card that earns you points or cash back – great! But instead of accumulating a balance and riding on it for months, schedule a payment to be applied to your credit card account at least twice a month. This will show that you’re attentive to your debt and active in paying it off.
Increase your credit limit. If you’ve recently gotten a raise, a new job that pays more, or have just come into more money, ask for a credit limit increase. Refer to the old saying – “The best time to ask for new credit is when you don’t need to.” Should you be granted this extra credit, don’t be in such a rush to use it. It’s always important to have more credit than liability – which will reflect well on your credit report.
In contrast – if you’re not earning enough to warrant a credit increase, simply put all of your financial energy into paying off new and old debts. Dedicating the necessary time to eliminate these debts will inadvertently increase your available credit.