Your credit report and score plays a huge role not only with future borrowing, but sometimes with future employment opportunities, if you’re applying for jobs that look at handling money and finances.
Improving your credit score is an important step towards financial stability and can be achieved through several key practices:
PAY YOUR BILLS ON TIME
Late payments can significantly impact your credit score. Ensure that all your bills, including utilities, credit cards, and loans, are paid on time. Setting up automatic payments can be helpful to avoid missing due dates.
KEEP CREDIT CARD BALANCES LOW
High credit card balances can negatively affect your credit score. Aim to keep your credit utilisation ratio (the amount of credit you use compared to your credit limit) below 30%. Paying down existing balances is crucial to achieving this.
AVOID OPENING TOO MANY NEW ACCOUNTS AT ONCE
Each time you apply for credit, a hard inquiry is made, which can slightly lower your credit score. Opening several new accounts in a short period of time can compound this effect. It’s better to apply for new credit sparingly.
CHECK YOUR CREDIT REPORTS REGULARLY
Errors on your credit report can harm your score. Regularly checking your credit reports allows you to spot and dispute any inaccuracies. You are entitled to a free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) every year.
MAINTAIN A MIX OF CREDIT TYPES
If possible, have a mix of different types of credit, such as revolving credit (like credit cards) and installment loans (like auto or student loans). This can positively impact your credit score, but only take on debt that you can manage.
KEEP OLD ACCOUNTS OPEN
The length of your credit history affects your score. Keeping older accounts open, even if you don’t use them, can be beneficial. However, ensure they don’t have high fees.
LIMIT HARD INQUIRIES
When you apply for credit, a hard inquiry is recorded on your credit report, which can lower your score. Be cautious about applying for new credit unless necessary.
NEGOTIATE WITH CREDITORS
If you’re struggling with debt, try negotiating with creditors. Some may offer solutions, like lower interest rates or payment plans.
SEEK PROFESSIONAL HELP IF NEEDED
If you’re overwhelmed, consider consulting a credit counselor. They can provide personalised advice and help you develop a plan to improve your credit.
Remember, improving your credit score is a gradual process. It requires consistent effort and financial discipline. Avoid quick-fix solutions, as they are often ineffective and can lead to further financial troubles.
Looking to get some knowledge and skills to effectively read, interpret, and manage your credit report? Join the course “Mastering Your Credit Report – A Comprehensive Guide,” FREE for a limited time. HURRY, slots are filling up fast!
