Credit scores remain an important part of everyday life. It shows a bank or other loaners how well you handle money so that they can know if they can trust you with a loan, home payments or new card. Credit scores can vary in ranges, from 300 to 850: the higher the number, the better the score.
However, some people end up on the lower end and struggle to get loans or to purchase houses and cars. Whether you faced previous issues or have unpaid bills, you may struggle with your credit score. After all, what if you need to purchase a house in the future or face another type of finance that may require a loan.
Use Credit Cards
This is an important one that many people overlook. First, if you don’t have a credit card, you need to get one. You can build up your score by making purchases with your card. After all, this allows you to use your card so that you can establish trust with your credit company through payments and loans.
View credit cards like this: it works as a loan or debt to your bank. They allow you to make purchases with your card and you pay them back through your account. They can then vouch for you by indicating that you pay your card charges, so this allows you to improve your credit score.
Keep in mind that a debit card doesn’t work this way. If you use a debit card, then you make payments directly from your bank account, so this doesn’t help you to increase your score.
Pay Your Bills On Time
Keep in mind, however, that improving your score goes beyond making purchases with your card. You also have to pay off your credit bill on time. If you don’t pay your credit bill, then this will affect your credit. However, if you do, then your score will improve overtime.
This doesn’t mean that you pay the minimum on your credit bill. You have to pay the entire amount before it passes the payment date. If you pay the minimum, then it will negatively affect your score. Pay attention to your purchases and make sure that you pay them all off on time.
Keep your payments in mind and stay up-to-date on your cards so that you don’t spend more than you have.
Avoid and Pay Off Debt
While you may need to go into debt for certain purchases, such as a house or a car, you should avoid debt whenever possible. Having too much debt can affect your score since it shows that you haven’t paid off money. This especially happens if you don’t pay the bills for your credit cards and gain debt that way.
If you do have debt, then make a plan to pay it off. As you pay off your debt, you can improve your credit and work towards becoming free of debt. Paying debt shows companies that you can handle debt and pay it off as necessary, so this helps you to work towards a better score.
Make sure that you constantly apply all of these steps. You can’t just use your card and occasionally pay a bill. You need to remain consistent so that you can do each of these to improve your score. Doing so shows your responsibility and ensures companies that you can handle money.
Remember that your credit company can update your score every 30 days. This means that you can see it consistently increase as you apply each off these steps. However, if you continue to slip up and miss multiple payments, your score will go down. Stay consistent so that you can maintain a higher score.
Consistency goes a long way, so staying consistent will help you to improve your score over time.
Improving your score takes effort on your part, but it will make things easier for you in the future. You can more easily purchase a house or get a loan if you need to. If you don’t improve your score, then you could face potential issues in the future that could pose larger roadblocks than you expected.
Working on your score will also improve your habits with money. By keeping your score in mind, you will become more mindful of your purchases and only get things that you can afford. You will remember that you shouldn’t spend excess or spend more than you have so that you can maintain a good score.
As you keep these tricks in mind, you can improve your score overtime and become better with money.
There are plenty of mobile apps that can also help. Credit Karma is one that can help you get started!