We all want better credit scores, because they lead to better interest rates when we need loans to buy a car or a house. Credit scores seem to be a mystery to a lot of people but you do not need to worry about the complicated aspects. With the below information you will be well on your way in increasing your credit scores. Increasing your credit score sure takes some efforts from your part but it can be done.
Generally, credit scores are compiled through the reporting of various activities you have done concerning credit issues. For example, if you open up a new credit card, have your credit checked by an apartment complex, or if you have gone into default on a loan. All of these things can positively or negatively affect your credit score. There are many things you can do to help increase your credit score. This article will cover a few of those things.
• Pay attention to credit card balances
Basically, you want to have a small percentage of revolving credit. This means you need to keep your credit card balances low, and pay them off each month. This in mind, you must also use your credit cards. Creditors want to see that you can pay back your loans. If you do not use your credit card, then you cannot show that you can pay them back.
No matter what you credit limit is you should only use about twenty to thirty percent of it each month. This also shows control, and will increase your credit score.
• Pay off your credit card balances
There are three reasons why you should always pay off your credit card balances:
1. First, there is no need to pay extra money to the credit card companies by accumulating interest fees.
2. Second, paying off your total balance will increase your credit score.
3. Third, you will not build up an overwhelming amount of debt.
This is where many people get into trouble. Credit is not money, and should not be used as such. Using credit cards will help increase your credit, but using it unwisely is what will get you into trouble. Know that you can afford to pay off whatever you charge. That will help you in the long run.
The difference between good debt and bad debt
Good debt can be old debt. Any debt that you have paid off in full is not a negative on your credit report. This is debt you have handled well and paid off. Why would a company not want to see that? They just want to get their money back, and if you can show you are capable of this, the better. This will also increase your credit score by balancing out anything negative.
Further, the longer the credit history you have, the better as well. Good credit use shown through the years will only increase your credit score.
Pay Your Bills On Time
So much can be said for automatic payments. That way you never have to worry about late payments or forgetting to pay. If this is not an option for you, then create a calendar that is equipped with all of the due dates for all of your responsibilities.
If you are not good about paying your bills or not paying them on time, the companies can report this to the credit agencies, and it will decrease your score. A simple thing as paying your bills on time can make a very big difference.
These things take time
If you abide by the tips above, watch your credit report, check for mistakes, and keep the increase of your credit cards to a minimum, then your credit score will increase. These are not overnight solutions. If there is something in error or unfair on your credit report, then you can dispute it, or have a credit repair company do so for you. Yet the best ways to increase your credit score is to work hard and pay attention.
Viewing your credit reports help, and they are available for free online. Yet, it is the everyday things that you can do to increase your credit score. Make sure you pay what you owe, and not spend more than you can afford. Keeping this in mind, create a budget that works these tips into your monthly plan.