Credit scores are figures that lenders rely on to analyse your financial capabilities to pay back your loans and the credit card bills. Habit is the most fundamental thing that shapes our life as a whole. A bad credit score is nothing but a final picture of a bunch of bad habits.
Charles Duhigg in his life-changing work states- “Change might not be fast and it isn’t always easy. But with time and effort, almost any habit can be reshaped.” Here is a list of 6 fundamental things that once you religiously resolve to do, your credit scores improve- rapidly!
Make Technology Your Virtual Assistant
The most significant and your first step ought to be to ensure that all your bills are paid absolutely on time. From the obvious credit card bills, your loans, your internet bills, your phone bills, electricity bills to even your rent must be cleared right on time. Towards this end, make your electronic calendar your best friend. Set automatic reminders for every day of the last week of a billing cycle and you will never miss these payments. And keep an important tip in mind- if on-time payments are good, early payments are better!
Be An Expert Credit Manager
The second most important factor that can make or break your credit score is how well you’re managing your credit or how optimally you are in the habit of utilizing credit. The percentage figure that is obtained when you divide the credit you are using over a given period of time by the amount which is the maximum credit you can use indicates your credit utilization. The general standard of a good credit utilization rate is 30%. Anything higher than this figure can begin to blemish your credit score. The less this percentage is, the better your credit score. To keep this figure as low as possible, reduce the balances on your credit card or pay whatever amount you have used quickly or you can even apply to have the limit of the credit card increased.
Multiple Hard Inquiries Hurt You In The Long Run
Next aspect in the list that determines the quality of your credit score is how much credit hungry you seem. The aim is to seem credit satiated. Every time you apply for a credit card or a loan, it starts off lengthy processes of analyses by companies into your credit and payment history. Although this sounds legitimate and harmless, the problem arises when you apply for too many of these services in a short period. This leads to the number of hard inquiries going up resulting in a bad score. You ought to, therefore, avoid applying for too many credit cards or loans in a short span.
If It Is Of No Use, It Is Still Of Use
Do you have an old credit card that you hardly ever swipe anymore? Think twice before deciding to close your account. An old card that is of little use to you can go a long way in bettering your credit score, because, for the obvious reason of its limited use, it has a positive and long history- both of these elements contribute to a very decent credit score. As discussed earlier, lower usage leads to a great credit utilization rate and a sustained stable utilization rate can do wonders to the credit score. This credit card can single-handedly even bring down your overall credit utilization across all other credits you use.
Keep Regular Checks On Your Reports
Oftentimes, unawareness leads to troubles that could have been easily avoided. A little care goes a long way in boosting your credit score. Many of us get lost in our lives and pay little attention to taking out time for something that doesn’t affect us immediately. Sometimes gross errors may creep into your record that can blemish your scores to a great disadvantage. Tracking your scores regularly not only keeps you on your toes concerning the way you are maintaining a healthy payment history but also brings to your notice glaring errors which may be there in your records. You must immediately bring this up with the authorities and get it rectified.
It is very important for you to maintain patience and follow the aforementioned points religiously. A long stable payment history displaying readiness in maintaining skilful debt payment capacities will naturally improve your credit score over a period of time. The greater your credit information with the lenders the better they can judge your financial capabilities and better your credit scores as a result. Therefore, adopt these best practices, wait it out and you will see a remarkable change in your ability to secure more credit with companies!