Every adult that has purchased anything on credit has a credit score. Your credit score gives you buying power when it comes to homeownership or financing a vehicle. It can also affect what you pay for internet and phone services, utilities, and insurance.
Some companies require a specific credit score to be employed with them. A high or low credit score can be the difference between a great job and a good lifestyle and higher interest and debts.
Because there is such importance placed on your credit score, it is essential that you know what yours is and how to get it higher and keep it there. Here are five things you can do to repair, raise, or maintain your credit score.
Be Careful with Credit Cards
A credit card can have a significant positive or negative impact on your credit score when it comes to your credit score. Most people carry at least one credit card though it is suggested that you avoid having one altogether if possible. However, if you feel you must have a credit card, here are a few things to keep in mind.
- Don’t get a credit card with a high-interest rate
- Don’t have more than one credit card
- Make more than your minimum payments
- Always keep the balance lower than 10% of your limit
- Make them a priority to pay off before no to low-interest loans or payments
- Only use your credit card for emergencies
Avoid Debt
While it is understandable that most people don’t have enough cash on hand to purchase a home or car without a loan, you should avoid purchase on credit as much as possible. However, when you do need to carry a loan, here are a few things to consider.
- Shop for lenders
- Get the lowest interest rate possible
- Borrow from a friend or family member to avoid interest
- Pay more than the minimum payment
- Make these loan payments a priority
- Pay them twice a month if possible
Stop Applying for Credit
Many people don’t realize that every time you apply for a credit line, whether a loan, a rental application or a store credit card, those applications initiate a hard credit check. Every hard credit check lowers your credit score. So if you are car shopping or trying to get a discount on your purchase by applying for the store credit card, you are lowering your score. Here are some things you can do to avoid this.
- Don’t apply for cards or store credit; you don’t need to get a discount
- Go to your bank or a lender and obtain preapproval for a car or home loan before shopping
- Use websites that do not affect your credit score to check your score and know what it is before applying for lines of credit
Dispute Your Credit Score
Many people think their credit score is etched in stone and cannot be changed until the credit falls off. While it is true that after seven years old, debt falls off, there are also times when items on the credit report don’t belong there. So here are some things you can do to get bad debt removed from your credit score.
- Dispute old debt that is still on your report after seven years
- Dispute any debt you don’t recognize
- Pay off any debt that is still on your valid credit report
Pay Bills on Time
While financially responsible, working adults should pay all bills on time. Those bills will indeed lower your score if paid late. Therefore, you should prioritize those bills with high interest rates and attachments to credit reporting when prioritizing your bills. Here are a few other things to keep in mind when paying your bills.
- Pay more than the minimum payments on bills with interest
- Check to see if any of your utility or service bills can be attached to your credit score for paying on time
- Make double payments per month on bills with interest
Conclusion
These are five areas of focus that will improve your credit score if you apply them. Knowing your credit score and how it affects your financial health should prioritize every financially responsible working adult.
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