Businesses use credit score data in a variety of ways. They check it to determine if you’re worthy of receiving access to an account or loan from a financial institution, a lower premium rate for home and auto insurance or a particular type of job. Utility companies and landlords also use credit scores to determine if they should charge you a deposit.
Given how much your score can positively or negatively impact your quality of life, it’s important that you work toward the highest score possible. Follow these four easy tips for improving your score over the next year:
1. Review Your Credit Report
A bad score often results from incorrect information on credit reports, such as a previously paid off debt that a company failed to report, or a credit reporting bureau failed to remove from your credit history. Identity thieves also create erroneous information that lowers your score. Thieves often add to your history high balance credit cards, mortgages and bank loans that you never took out. Regularly reviewing your credit report help you keep track of where you’re at, strategize for improvement or maintenance, and avoid costly mistakes.
2. Settle Your Current Debts
Your score is also impacted negatively by the current amount of debt and the amount of past due debt in your financial history. Fix these problems by setting up affordable payment arrangements with creditors and companies or paying off bills through total balance lump sum or negotiated settlement. Avoid future debt by planning a detailed budget based on your current income and needs. If needed, use coupons, rebates, and explore options to cut down on your current bills.
3. Maintain a Good History
Once you have an excellent financial profile, it’s important that you stick to it. Too many credit applications and high credit card balances can bring your score down. Try to maintain a mix of standard bank loans for whatever life events you experience, such as education, vehicle and mortgage loans. Limit yourself to two or three credit cards will help you avoid high amounts of future debt. The key to a good history is keeping your balances down and paying more than the minimum due.
4. Pay Bills on Time
Your payment history, including payments made for car loans, student loans, utilities and entertainment services, impacts your credit worthiness. Pay your bills on time or before due dates. To do this you can utilize online mobile banking tools and automatic payments; like the options found at TruPartner Credit Union, to stay on top of your bills. These automatic payment options enable you to select the account your bills will be paid from and the date they will be paid. This can be extremely useful in helping you stay organized. If your situation changes, these automatic payments can be easily changed or edited in the future.
Beyond these tips, never forget that the best way to improve your credit score is by living within your means. Lastly, re-evaluate your spending ability regularly by comparing your income to your bills, expenses, and savings goals.