Hopefully you’re sticking to your New Year’s Resolutions, if you made some. I know it’s hard but keep on keepin’ on and you’ll start to feel some accomplishment. I’ve been working on the 52 Week Savings Plan and have week 1 in the bag. Well, more like in my bank account but you get my drift.
What do you do if your resolution was to improve your credit score? I’ve got some ideas that may help you there. Your credit score is this all powerful number that can help you to get a new car, a house, a cell phone and even a job. Having a good credit score is key. But what do you do if you have a less than stellar credit score? Time to give up and join that Mars expedition to start a new colony of life? No way! First, understand where you are on the credit score spectrum and then follow my tips for improvement. You’ll be saying, “No thanks, Mars. Savvy Student helped me improve my score and Earth is my jam now.” Well, maybe you won’t say that but let’s pretend.
Ok, the credit score spectrum. Think of it as a rainbow, but minus a few colors. It ranges from about 300-850. You want to get up to those higher numbers. Anything above 700 will have you breathing easy. Get above 750 and your life will be a breeze when looking to finance something or obtain credit.
But what if your score is below 700 and you want to raise it? The suspense is killing you, right? Well, you have to do a little work but it’s worth it in the end.
- First thing is first. Get copies of your credit report. Go to http://www.annualcreditreport.com and request your FREE copies. Then look them over with a fine tooth comb and find any errors that may be on there. Have accounts that say they are in collections but you have proof you paid them off? Get that taken care of. Your score can be majorly impacted by having these errors fixed.
- Set up a bill schedule. You have got to make sure your bills are paid on time. If your car payment is late one month, it lowers your score. Can’t make your payment on time? Call the company and they can usually change your due date. Put reminders in your calendar on your phone or write it on a Post-It and stick it on the fridge. Whatever you need to do to pay your bills on time, do it.
- Stay away from all of those credit card offers. When you go to Macy’s and they offer you an extra 20% off if you open a Macy’s card, say no. Every single time you apply for credit, your score goes down. Don’t open new lines of credit if you don’t need to.
- Keep credit cards at the golden ratio. You should have your balances below 35% of your available credit. Have a credit card with a $1,000 limit? Don’t have more than a $350 balance. That shows you know how to responsibly use credit by not having your card maxed.
- Pay more! Try to pay more than the minimum amount on your bills. Anything that you have a loan on, whether it be a car loan or a credit card, pay a little more than the minimum. Every penny counts! Not only will you pay it down faster but you’ll pay less in the long run because you’ll be paying less in interest.
- Pay it off. Set yourself up a budget and work to pay off any high debt or maxed out cards. Lowering the amount you owe, overall, greatly improves your score.
Financial fitness takes work but the results can be life changing.
Did you take any other steps to improve your credit score? Let me know in the comments!