How To Improve Your Credit Score - Personal Finance Basics

By: Brandon Schmid

The health of your credit score is incredibly important to your finances because of a number of reasons. For starters good credit scores are exactly what banks are looking for when they decide whether they will give you money or not. More often than not insurance brokers or landlords often look into your credit when determining if they will choose you as a potential client or possible tenant. This article will describe to you a number of ways of how to improve your credit rating and can help with your personal finance basics.
1. Pay Your Bills On Time
The reason why this is 1st on my list is due to the fact that this is likely the most valuable rule you should follow when trying to improve your credit score. If you go to a bank and want to apply for a home mortgage the primary thing they will look at is if you pay your bills on time. This includes everything from your cable, telephone, heat and hydro or any other types of bills. Your credit score is determined by whether you make, miss or are late with your payments. If they notice that you religiously miss or are late for payments, there is a good chance you will not be approved.
Helpful advice so you will make every bill payment:
-Create a separate checking account and allocate enough money at the start of every month for your bills so you always have enough.
-Create automated email reminders for when your bills are due.
-Set up automatic payments with online banking.
-Keep a written calendar of when every bill is due. Review it on a regular basis.
-Purchase everything possible with cash. Not having a credit card means one less bill to worry about.
2. Never Let Bills Go To Collections
This seems like a no brainer but these collection agency's exist for a reason. You can't ignore your bills. They won't just go away. If just one of your overdue balances go to collections you are going to pay surcharges, major interest and your credit rating will be shot.
3. Keep Credit Card Balances Low
The most simple of personal finance basics is if you must use a credit card, keep the balance at zero or as low as possible. The less of your available credit you use the better. The number that most reflects your credit score the most recent balance on your statement. Even if you pay your bill in full every month you should never exceed more than 30% of your available credit. The less you use the better.
4. Use Old Your Credit Cards
This may seem a bit odd but try not to change from one credit card company to another. If you hop-scotch around and constantly close or cancel credit cards your credit score can be adversely affected. Try to use the credit card you got when you were 20 and stay with it. If you primarily use a different credit card, attempt to keep your old cards active and buy something with it every once in a blue moon. Be sure to pay it off in full each month.
5. Check Your Scores Once A Year
Credit scores can change fast. One day everything may be going well and the next your credit rating could be in a mess. Checking your score each year is a personal finance basic tip we all should follow. This allows the opportunity to correct any mistakes that the banks or you might have made. Be careful though. If you check your credit score too often it will affect your scores in a negative way. Checking once a year is your best option. Another thing to do is to dispute any inaccuracies like unpaid bills or late payments when you paid on time or any other problems that may come up.
High credit scores create the opportunity for lower interest rates on mortgages, car loans, personal loans and credit cards. One of the earliest personal finance basics you should follow is to keep your credit rating healthy so you will be able to take advantage of many different financial opportunities. The sooner you can fix any problems you might have with your credit, the sooner you will get everything back in order. If you follow these tips you will be well on your way to improving the health of your credit score.

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