Like it or not, your credit score affects just about everything in your financial life. If you have a bad credit score, you could be denied a job, pay more money for car insurance and, of course, you will pay more for credit.
People tend to think that a credit score is a mysterious thing but it is not. It is actually just a very simple mathematical formula that takes a few things into consideration. Things that you have direct control over.
If you want to make your credit score better and take advantage of all of the perks that come with that, keep reading. Here are the top steps that you can take to get that credit score heading in the right direction. Get your score in order and say goodbye forever to online payday loans in Texas.
1) Check For Errors
The credit bureaus are far from perfect, in fact, they make mistakes all of the time. This is why you really need to constantly be monitoring your credit report. This is simple these days because there are a number of free services that allow you to do it.
If you have a credit card, you probably have access to free credit monitoring with your account. If not, you are still in luck. You can simply join a free service such as Credit Karma or Credit Sesame.
When you pull your report look for any errors and dispute them. To dispute, you will simply write the credit bureau a letter stating the error. They then have 30 days to investigate the matter. If the information can not be proven, it must be removed.
If you do not regularly monitor your account, you should check your report at least once a year. Like I said though, monitoring it is free so there really is no reason not to constantly monitor it.
2. Pay Your Bills On Time
The importance of doing this can not be understated. Your payment history makes up about a third of your score. Just one 30 day late strike can affect you for years.
This does not mean though that you can not make some improvements if you have has a shaky history of paying on time. Start paying your bills regularly now and in 6 months or so, you should start seeing your score gradually increase.
If paying your bills on time is not your thing, use the tools at your disposal to get better.
For starters, sign up for automatic payments. Yes, it is a bit intrusive to let companies take money on a regular basis but if it protects your credit score, it is well worth it. To make sure that there is always money there to pay the bill, connect a savings account to your checking. That way, your bank will automatically pull out money if needed.
If automatic payments are not our thing, at least sign up for every bill reminder that you can. If your creditor offers e-mail alerts, sign up for them. If they want to text you reminders, agree to them. Every little bit helps to get those loans paid on time.
Finally, if you happen to miss your payment due date remember to pay it as soon as possible. Just because a creditor considers it late does not mean that it will go on your report. It has to be 30 days late to count against you.
3. Pay Down Your Balances
Carrying a high revolving credit balance will cost you in several ways. For starters, it is costing you a fortune in credit card and loan interest. Besides that, it is also costing you a lot of points on your credit score.
The number you want to shoot for is 30 percent. You should try to have your revolving credit balances below 30 percent. Below 10 percent is even better but most of the advantages happen once you get under 30 percent.
If that number sounds intimidating, don’t worry, you get improvements along the way. If your balances are at 90 percent, get it down to 80 percent and you will see a nice improvement. It keeps on going all the way down until you get below 30 percent.
The key to paying those balances down is paying more than the minimum, even a few dollars will help. Every extra dollar you pay is a dollar that you are not paying interest on.
4. Be Patient
Even if you have a sketchy credit history, the key is to be patient. Pay your bills on time and get your credit balances in order and things will get better, it just takes time.
Even bankruptcies and foreclosures can be overcome with time. Just start doing the right thing now and let your credit age. As long as you do not make any more credit mistakes, your score will increase.
Once your score increases, a world of opportunities will open up, including affordable loans and credit.
To Wrap Things Up
Your credit is everything when it comes to your finances. If affects so many things in your life, not just getting a loan. Protect it, improve it and you will have a much better life, financially speaking at least.