With financial headwinds worldwide, many consumers have to dip into their credit. Amid increasing job insecurity, credit provides a safety net and peace of mind. However, many realize too late that their credit score may be in trouble.
One reason this comes as such a surprise is that 54% of Americans say they never check their credit score, according to Financial Maintenance. This means that being turned down for a loan or a new credit card may be a rude awakening for many.
Once people check their credit score, they may be disappointed that an unpaid bill or a neglected debt may create problems for them. The following are simple ways to improve your credit score.
Check Your Credit Score Frequently
Credit score maintenance requires checking your credit regularly. Simply visit this website to get a clear reading of your credit status. You can get a credit report from:
You are entitled to a free report every 12 months. When you receive it, look for unpaid bills or debts. If you find a mistake, you can contact authorities and ask for an explanation or corrections.
Aim for that 30%
According to FICO or Fair Isaac Corp, 30% of your credit score is based on how much is owed. People who are repairing their credit scores may tend to focus on debts and outstanding bills, but that is only part of the picture. The actual score is created from the proportion of debt to overall credit. The aim is not to exceed 30%. For instance, if your line of credit is $9,000, you should not reach or exceed $3000 but should leave at least $6,000 of the credit available.
Pay Multiple Times a Month
If you get right up to your credit card limit but don’t exceed it and pay it off every month, this could hurt your credit. The reason is that if the credit card company reports your balance at a time when it has reached the maximum, it might reflect negatively. Paying off your credit card bill more than once a month so it never reaches the limit will help raise your score.
Open Up Your Credit
Since a debt ratio to available credit determines the credit score, opening up your credit may lift your score. Ask your bank to extend your line of credit so you have more credit available. If the bank does not agree to this, think about opening another bank account or sign up for a new credit card which will show more credit. Don’t overdo it though—opening too many bank accounts can be a red flag for credit agencies. However, as long as you aren’t in trouble with your original account, opening a new one shouldn’t be a problem.
Give Yourself Some Credit
Credit troubles are not uncommon, but they shouldn’t be dismissed. Employers sometimes look at the credit health of potential employees to see if they are reliable. A low credit score can hurt your chances of buying a home or getting a loan. If your credit card has dipped too low, repairing it can take some time, but there is always hope. Improving your credit score takes patience, but it is worth the effort.