It is no mystery (or at least it shouldn’t be) that just about everything you do in the financial world revolves around your credit score. And, of course, your credit score revolves around what’s on your credit report. Your credit score affects your life.
If you have poor or downright bad credit, you know it. So, here are 10 changes you can make today to improve your credit over time.
1. Become an Authorized User
If your spouse or parent has good to great credit, there’s a quick and easy way to boost your credit score. Have them add you as an authorized user on one more of their credit cards.
When you’re added as an authorized user you can piggyback on the good credit that your spouse or parent has. Their good to great credit score positively affects your credit score.
2. Clean Up Your Credit Report
By law, you’re entitled to one free credit report from each of the three credit bureaus each year. Usually, you can access and download them online, so order your free credit reports now and start scouring them line by line.
You want to check for anything that is incorrect on the report. Contact the creditor and credit bureau to report and correct the error(s).
3. Pay Your Bills
One of the biggest portions of the credit score calculation is paying your bills. Always, always, always make sure that you are paying your bills. If, for some reason, you’ve gotten into a bad habit of not paying your bills, STOP it and start by paying any and all of your bills that are due today.
4. Pay Off Credit Cards
Pay off or pay down your credit card balances. The amount of your credit card balances compared to the total credit line you have is called the utilization ratio. If you have some or all of your credit cards maxed out then pay off or pay down your balances to bring down the utilization ratio to help improve your credit score.
5. Leave Old Debt Alone
The longer your relationship with your creditors, the better it is for your credit score. Basically, leave your old debt alone. Don’t go out and start closing all of your old credit accounts (even if you don’t have balances or use the credit anymore).
Instead, leave it be. It actually helps your credit score to keep these long-lasting relationships in place.
6. Set Up Payment Alerts
Paying your bills is your number one priority. Paying your bills on time is your second priority (if not right up there in first position with paying your bills). Do whatever you have to do to make sure that you pay your bills on time.
Set up payment alerts as part of your online bill pay through your bank. Set an alert in your phone. Slide your paper bill in your paper calendar in or around the due date to remind yourself when to pay your bill.