By Marsha Barnes
I can’t recall a single time in any of my finance dealings or client relations that the topic of credit reports hasn’t come up. How important is that magic number? EXTREMELY IMPORTANT. While this is another task to add to our personal finance plans, we cannot neglect to study it, research how we can make ours better, and understand the impact of the nuts and bolts within it.
Credit mastery is not difficult, it’s the beliefs that we have around what credit can or cannot do for us that creates a mystery. Why should you care? Because credit impacts our lives. Because Americans are finding themselves more financially challenged as prices soar and debt rises, and I’m sure that you can jot down many reasons of why your individual score matters. Let’s discuss 7 Steps to Boosting Your Score:
1. Pay your Bills on Time
Your payment history affects 35% of your score. Make it a habit of paying your bills on time. Let’s think of it like this, if you were to lend money to a friend or family member, wouldn’t you expect it back on time? If you didn’t receive it would you become hesitant before lending again? Creditors are no different.
2. Dispute Errors
One out of every four credit reports contains a serious error that will hurt your credit score. Finding and correcting such errors is a big factor in keeping good credit. Comb over your report intensely while paying attention to every detail.
3. Develop a Credit History
A well balanced credit history offers a platform that will allow each credit bureau to better understand how you adjust and handle a variety of credit. While I often hear people mention that they’ll never need credit or would prefer to steer clear of it, think about those larger ticket items such as a home, college tuition, funds to start a business, and the list goes on. Indeed each of these can be paid in cash; however, think about your assets and if this is your current reality.
4. Keep your Credit Balance Low
25% or less of your credit limit on any credit line should be the goal. Maxing out credit cards can have a major impact on your credit score. Creditors and the powers that be at the credit bureau like to see that you can effectively, and responsibly manage credit.
5. Manage Debt Accordingly
Lenders prefer to see that you can successfully manage major credit cards, retail store cards, installment loans, and even car loans. Yes, it’s a juggling act that must be perfected.
6. Set One Credit-Building Goal
It might be overwhelming to talk about all the ways you could improve your credit health. Instead of tackling all of them, think about just one thing that you can start doing today to improve your overall credit score.
7. Add a Credit Check-Up Calendar Alert:
You don’t necessarily need to check your credit score and report every day. While changes happen at any time, most changes take a full billing cycle to update to your credit report. Instead of spending the time to review your credit each day, set up a calendar reminder each month to give yourself a quick credit check-up.
Tell us, “What financial change will you take immediately to improve your credit score?”
Marsha Barnes is the owner The Finance Bar. Visit www.financebar.com for more information.