Do you know your credit score? If not, you should find out about your credit health as soon as possible. Your credit score is one of the most important numbers in your life, and it can have a huge impact on your ability to get loans, rent an apartment, and even get a job.
It was just 1974 when all women were guaranteed the right to have a credit card in their own name. We have a lot of catching up to do!
Did you know that nearly 80% of Americans have poor or no credit history? If you're one of them, you can get higher credit scores and save money!
In this blog post, we will discuss 12 simple tips that will help you boost your credit score with good credit habits, build your credit with a solid credit history, and save money!
Get Your Credit Reports
Tip 1: Get your credit reports. The first step to improving your credit score is understanding where you stand currently. You can get a free credit report from AnnualCreditReport.com. By law, you are entitled to free annual credit reports from each of the three major credit bureaus. Your Equifax credit report, Experian credit report, and TransUnion credit report will show you the information these credit bureaus have on you, including any credit card accounts and your credit score.
Make sure to check your credit report for any errors and dispute them immediately. Understand what goes into your credit score calculation. Your credit score is determined by five main factors: payment history (35%), amount of debt owed (30%), length of credit history (15%), new credit accounts opened (ten percent), and type of credit used (ten percent). It's important to review this report carefully to identify any errors or areas of improvement.
You can also get a free credit score from several different websites, such as CreditKarma.com or Quizzle.com. These scores are not the same as your credit report, but they will give you a general idea of where you stand.
Start Establishing Credit and Building Credit
Tip 2: Start using credit cards to build credit. Credit cards are one of the best ways to build credit, and if you use them responsibly, they can help improve your credit score in a short period of time. Make sure to always pay your credit card bills on time and keep your balances low. It is best if you can be making on time payments and pay the balances in full each month. Even if you use your credit card once a month to go out to dinner, paying even a low balance in full every month will start to build up your credit history.
Credit history accounts for 15% of your FICO ® Score. The longer, the better. So if you are new to credit or rebuilding credit, start building a good credit history now. Your credit scores improve if you have different types of credit, such as auto loans, credit cards, student loans, and so on. Debt-to-income ratio (DTI) Expand While this isn't directly part of how your credit score is calculated, your debt-to-income ratio (DTI) helps determine if you can comfortably afford to make your payments.
What you definitely do not want to do is run up your credit limit. How much you owe makes of 30% of your score. It's better to keep balances low. If you plan to carry a balance on your credit card, try to stay below a 30% utilization rate of your credit limit.
Get A Secured Credit Card
Tip 3: Get a secured credit card. Secured credit cards are a great way to start building credit and establish credit if you’re just starting out or have had some trouble with debt in the past and have poor credit. With a secured card account, you put down a security deposit that serves as your credit limit. Secured credit cards are a great way to prove that you can manage debt responsibly, make on time payments, and eventually transition to an unsecured card.
Use a Credit Monitoring Service to Keep Track of Your Credit Scores
Tip 4: Use a credit monitoring service. A credit monitoring service can help you keep an eye on your credit score and credit report, and it can alert you if there are any changes or suspicious activity. This is a great way to stay on top of your credit health and protect yourself from identity theft.
Pay Bills and Pay Off Debt
Tip 5: Pay off debt. One of the best ways to improve your credit score is to pay off any outstanding debt. Start by creating a budget and making a plan to pay off your debts as quickly as possible. This will not only improve your credit score, but it will also help you save money on interest payments. Paying bills helps improve your credit score. Missed payments hurt your score.
Automate Your Finances
Tip 6: Automate your finances. Automating your finances can help you stay on top of your credit score and debt payments to credit card companies and other debtors. Automated payments can help you avoid late payments and penalties, which can hurt your credit score.
Monitor Your Credit Utilization Ratio
Tip 7: Monitor your credit utilization ratio. Your credit utilization ratio is one of the most important factors in determining your credit score. This ratio measures how much credit you’re using compared to your credit limit. Try to keep your credit utilization ratio below 30% to maintain a good credit score.
Avoid Closing Old Accounts
Tip 8: Avoid closing old accounts. Closing an existing credit card account can actually hurt your credit score, so try to avoid doing this if possible. Old accounts show that you have a long credit history and responsibility, and build your credit. It is better to have an account with years of history, even if you are not using it.
Stay on Top of Your Credit Score
Tip 9: Stay on top of your credit score to build your credit. One of the best ways to improve your credit score is to simply stay informed about what you can do to boost it. Make sure to check your credit score regularly and track your progress over time.
Use a Credit-Builder Loan
Tip 10: There are financial products that can help you improve your credit score. Use a credit-builder loan. A credit-builder loan is a secured loan designed to help people build credit who have little or no credit history. They are also called "Fresh Start Loans" or "Starting Over Loans." You need to have income to make the payments, but you do not need good credit, established credit, or credit history. A credit-builder loan is a great way to improve your credit score if you’re just starting out. This type of loan helps you build credit by reporting your monthly payments to the credit bureaus and establishing a positive payment history. Over time, this can help improve your credit score and make it easier to get loans in the future. Thoroughly research credit-builder loans before applying. Not all credit-builder loans are created equal, so make sure to do your research and find a loan that is right for you. Credit-builder loans are not the same as personal loans.
Become an Authorized User
Tip 11: You can grow your credit by becoming an authorized user on someone else's (with good credit!) account. This can be a good way to boost your credit when getting started, but you still need to build up your own credit history. Becoming an authorized user means you can make purchases on the account, but you are not the primary account holder. The primary account holder is responsible for making payments.
You will need to check if the credit card issuer reports an authorized user's payments to the credit bureaus.
Get Credit For the Bills You Pay
Tip 12: How about taking bills you already pay and having those count towards your credit score? Rental Kharma and LevelCredit are rent-reporting services that take the rent bill you are already paying and put it on your credit report. Experian Boost reflects your cell phone and utility bills on your credit report, but just on your
Stay Positive: Be Patient and Consistent
Be patient. Building good credit takes time, so give yourself a break and keep up the good work. You can rebuild credit and your credit score will improve over time if you keep consistently using credit building tools.
These are just a few tips to help you boost your credit score and save money.