These 8 Tips Will Help You Manage Your Credit
Your credit score is an essential part of securing loans for homes, cars and other large purchases. It’s something that’s easy to ignore until it’s too late, but managing your credit score is essential to staying prepared to do what’s best for you and your family.
Here are eight ways to manage your credit score.
- Getting Your Report from the Three Bureaus
Your credit score is a large part of securing loans for your car, home and other large purchases. Lenders often use your FICO score to determine whether they think you will pay back your loan in a timely manner.
The FICO score is a combination of reports compiled by three difdit bureaus: TransUnion, Experian and Equifax. Did you know you can access the full reports for free?
You are entitled to a copy of your credit report from each of the bureaus once a year and the reports thoroughly look at expenses you may not even be aware that you owe. Performing hard inquiries on your credit can impact your credit score, while accessing these reports lets you tackle the root problems of a low credit score.
- Budget to Pay off Debt
If you have outstanding debt, it’s a good idea to work payment into your monthly budget.
It’s easy to put off praying towards your debt, but the longer you let it set, the more interest collects on it and the longer you go knowing you owe money. Even a small amount of money per month can get you started on a better financial path.
Your current debt also impacts your credit score. As long as you have old debt and outstanding credit card balances, you’ll have unpaid debt reflected on your credit reports, impacting your score.
- Strategize with a Credit Card
If you’re new to building credit, one thing that can help is to open up a credit card account. You can build credit by making small purchases on the card, such as gas or groceries and then pay it off on time.
Over time, those payments will establish a good credit score that you can use to qualify for larger loans in the future.
Having a credit card isn’t an excuse to spend beyond your means but it is a nice way to build up your credit score so you can start making purchases.
- Don’t Apply for Loans Close Together
If you try to take out several loans at once, creditors will notice. Doing so concerns lenders that you won’t be able to pay their loan off, so they might reject your application.
Applying for multiple loans also can lower your credit score, since more lenders will be accessing your score at once.
By spacing out the purchases that require loans, you give your score time to rest and keep lenders from getting nervous.
- Get Co-Signers
If you don’t have a high credit score, one way to secure many loans is to have a co-signer that has.
Having a co-signer is having someone who tells the lender that they can cover any payment you missed, giving them peace of mind. You’re much more likely to receive a loan with a co-signer than you are without one.
You want to choose someone who you trust to know some of your financial information, as a co-signer can get information about the loan from the lender.
- Avoid Charge-Offs
A charge-off is the change of hands from a place of payment to a collections agency due to a long-term missed payment.
These can ruin your credit score by showing on your reports and telling lenders that you are unlikely to pay them back.
Always check with any offices or businesses that use insurance or other payment methods to ensure that you don’t owe anything to them before a charge-off is made.
- Dispute Incorrect Charges
It’s important to check your credit card and bank statements often, so you can recognize if any incorrect or fraudulent charges are on them.
Even if you’re careful, there’s still a chance that your information could get into the wrong hands or that a vendor is overcharging you for a product or service.
These issues can damage your credit, even though you are not at fault. As soon as you see a suspicious charge, contact the vendor for more information. You can also dispute the charge with your credit card company.
- Don’t Use More than 30%
When you have credit available to you, it’s tempting to keep using it before making your first payment. However, a large balance on your card when you only make the minimum payment reflects negatively on your credit score. It makes lenders think you’re taking more than you give.
Experts say its best not to use more than 30% of your available credit at one time to ensure that you can pay it off in a timely manner.
Managing Your Credit for a Better Future
Your credit is essential to making purchases that build equity and help you and your family as you move throughout life. By managing your credit, you can improve your credit score, making you eligible for loans in the future.