A large portion of your credit score (approximately 30%) is paying your bills on time. Even if you cannot afford to make full payments, it is critical to make sure you at least make a minimum monthly payment. The easiest way to ensure your payments is settings up alerts and notifications to make you aware of your bills that are due. Setting up automatic bill pay is another way to make sure that you do not forget to make payments in a timely manner. The final way to make sure all of your payments are made on time is to call your lenders and change payment dates to where they align to a time of the month so you can remember to make payments. An example of this idea is to have all of your bills due at the end of the month.
Credit utilization is a way to gauge how much credit you should be using. A good rule of thumb here is that you should not use credit more that 30% of the time. Two ways to follow this ruke of thumb is to charge less and use a down payment. Swiping your credit card is an easy way to run up your credit utilization (bad). Putting a down payment down on financed items is a great way to keep your credit utilization down. Instead of financing 100%, put a down payment and finance less. This concept will ensure that you keep your credit utilization lower, which build your credit score. It is important to note that people with the highest credit score usually use less than 10% of their available credit.
After reading the first two paragraphs, you might be feeling a little down. Maybe even asking how do I improve my credit utilization? One way is to ask your creditors for a credit increase, let’s talk numbers. It you have a credit card with 1,000 dollars and your credit limit is 4,000 you have a credit utilization rate of 25%. HOWEVER, if you call and get your limit increased to 8,000, your credit utilization just plummeted to 12.5%. This tactic is simple, effective, and does not require you to make any additional payments to lower your credit utilization rate.
Another easy way to boost your credit score is counterintuitive. People want to close all of their accounts except a few that they have to – this logic is flawed. Leander want to see a long history of responsible behavior. Instead of closing these accounts, it is best to use them sparingly, if you do not use them, the lender might involuntary close the account. It is important to make sure you are not paying annual when you make your decision on what accounts to keep.
Perhaps the two most important items to keep in mind is to stay vigilant and be patient. A critical accept to building your credit is watching your score. There are several credit monitoring tools, most of which are free, that you can check as frequently as you would like. You do not want to overdo checking it either, as a watched pot never boils. Which leads use to our next point, be patient, it takes time to build your credit, just keep doing the right things we mentioned here are your score will grow!
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