Your credit score is one of your greatest financial assets. If your credit score is high, you will have more financial opportunities, as well as lower rates and fees that will save you money.
The big “mystery” however, is how to get and keep a high credit score.
Well, if you want to get, maintain or restore a good credit score, it can be done quicker than you likely think with a little directed and consistent effort.
There are a few factors that go into the determination of your credit score. Optimizing each of these factors will help to improve your score over time. These facts include but are not limited to:
- Repayment history
- Current debt owed
- Age of credit
- Number of accounts
- Type of debt and ratio of type of debt (revolving to installment)
- Recent credit inquiries
- Registered income
Here are some ideas for maximizing your effort in some of these areas to see efficient results with your credit score:
- Pay off or down revolving credit cards. Revolving credit cards are those you know as “bank cards” such as the Discover card, Capital One, etc. They are “monthly credit cards” that calculate interest monthly and have a monthly payment that will go up and down based on your balance. Paying before the due date is a “credit score hack” that can help if need to see a quick move in your credit score. Even though you might pay before the deadline, credit card companies report the debt owed on a monthly basis, which may be before the deadline. On your credit score it will not show as bad debt, but it will decrease your overall score. The standard recommendations are as follows… If you have one credit card, pay it off before the month’s end. If you have two credit cards, pay the minimum on both of them and work on paying off one at a time.
- Registered Income. This is your official salary from work. While your income isn’t technically factored into your credit score, it is considered in many loans as your debt-to-income ratio. Basically, the numbers they crunch are matched with what you earn. If your debt is larger than what you earn, your debt to income (DTI) is higher and you are considered a riskier borrower.
- Check your credit score online. To stay on top of your credit, you need to know where it stands and why it is what it is. A good credit monitoring program like Credit Score Junkies can help you do this easily, at low cost.
- Use credit wisely and judiciously. Do not apply for every car, credit card, and home that you are looking at as an eager consumer. Remember, you want to protect your credit score and since too many inquiries over a short period of time can lower your score, you want to keep inquiries to a minimum—when you really need them for big purchases.
- Open a savings account and save money for emergency purposes. Many people find that it’s not daily life, but instead life’s emergencies, that end up putting them in a financial bind. Since a lot of people don’t have savings, when those emergencies happen, they have to take on more debt to cover the emergency costs. Then, that debt is added to existing debt and it can get out of hand fast.
Protect your credit score like it’s gold. Or at least like it’s cash—because it literally is. It can mean everything to you – and mean saving or losing money – when you are trying to make a big or important purchase or need to use your credit for an emergency.
It’s not too terribly hard to raise a credit score but it does require knowledge, effort and discipline.
A credit score monitoring service like Credit Score Junkies can be a greatly beneficial tool in this process. it will protect you from fraud and help inform you of ways to increase your credit score when needed.