As you may know, your credit score is one of the most important aspects in having a healthy financial life. Those three numbers can affect most aspects of your life, from being approved for loans and credit cards to owning or renting a home. Your credit score can also impact what you’ll pay in interest rates and even your job prospects. However, there are various ways to help improve your score, regardless of how high or low it is. Here are a few tips to help you get started:
- Keep your payment record clean. They say that the number one thing you’re supposed to do when you receive a bill in the mail is to pay it on time. However, you’d be surprised how many people don’t always do that. Whether it’s your electric or gas bill, car payment, or even something as small as Netflix, keeping an on-time payment record shows credit reporting agencies that you can be trusted to make healthy financial decisions, thus making you more qualified for loans or credit cards.
- Manage your debt as you go. Building up your payment history is a important step, but at the same time, you don’t want to max out your existing line of credit. To start, don’t charge more than 30 percent of your available credit, and to keep your credit score active, use your credit card for smaller purchases – happy hour, coffee, or a tank of gas – and pay it off every month.
- Safeguard your credit history. One of the ways your credit score can deteriorate is if you accrue a number of inquiries (or hits) on your credit history, such as late payments and fees, as it can seem like you’re using credit to bankroll your lifestyle. As such, this can result in being denied for credit cards and loans, as lenders may see you as unreliable. You can avoid this by not applying for store credit cards, cosign loans for friends, or applying frivolously for credit cards because you can get freebies.