How To Improve Your Credit Score – Personal Finance Basics

The health of your credit score is incredibly important to your finances for a number of reasons. For starters good credit scores are what lenders are looking for when determining whether or not they will lend you money. In a number of cases insurance company’s and landlords often look into your credit when determining whether or not to have you as a client or tenant. This article will show you a number of ways of how to improve your credit score and will help with your personal finance basics.

1. Pay Your Bills On Time

The reason why this is first on the list is because this is probably the most important rule to follow when attempting to boost your credit score. If you go to a bank and are applying for a home mortgage the first thing the bank will look at is if you pay your bills on time. This includes everything from your cable, telephone, credit card or internet bills. Your credit score will directly reflect if you make, miss or are late on your bills. If they see that you religiously miss or are late for payments, chances are you will not be approved.

Some tips so you will never miss another bill payment:

-Open a separate checking account and allocate enough money at the beginning of each month for your bills so you always have enough.

-Set up email reminders for when your bills a re due.

-Set up automatic payments through your online banking.

-Keep a written calendar of when each bill is due. Review it regularly.

-Buy everything you can with cash. No credit card means one less bill to worry about.

2. Never Let Bills Go To Collections

This seems like a no brainer but these collection agency’s exist because thousands of people allow their unpaid bills to go this far. You can’t ignore your bills. They won’t just go away. If any of your unpaid balances goes to collections you are going to pay surcharges, major interest and your credit score will be shot.

3. Keep Credit Card Balances Low

The most simple of personal finance basics is if you must use a credit card, keep the balance at zero or as low as possible. The less of your available credit you use the better. The number that most reflects your credit score the most recent balance on your statement. Even if you pay your bill in full every month you should never exceed more than 30% of your available credit. The less you use the better.

4. Use Your Old Credit Cards

This may sound strange but don’t switch from one credit card company to another. If you hop-scotch around and continually close or cancel credit cards your credit score can be adversely affected. Try to use the credit card you got when you were 20 and stick with it. If you primarily use a different credit card attempt to keep that old card active and use it once in a blue moon. Be sure to pay it off in full every time.

5. Check Your Scores Once A Year

Your credit can get into trouble in a hurry. One day everything may be fine and the next your credit score could be awful. Checking your score annually is a personal finance basic we should all follow. This allows the opportunity to correct any errors that the banks or you may have made. Be careful though. If you check your credit score too often it could also affect your scores. Checking once a year is your best option. Be sure to dispute any inaccuracies such as missed or late payments when you paid on time or any other issues that may come up.

High credit scores create the opportunity for lower interest rates on mortgages, car loans personal loans and credit cards. One of the earliest personal finance basics you should follow is to maintain the health of your credit score so you will be able to take advantage of many different financial opportunities. The sooner you rectify any problems with your credit, the sooner you will be back on track with it. If you follow these tips you will be well on your way to improving the health of your credit score.

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Filed under: Credit Repair

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