How To Give Your Credit Score A Boost

Your credit score says a lot about you or rather the way you handle your finances. Unfortunately this snap shot of your creditworthiness doesn’t tell lenders, landlords, insurance companies and even employers the circumstances behind the number. As most people are digging out from the damage caused by the recession, many credit scores could use an injection of points. The climate in the world of finance is warming but we won’t see lenders rushing to give credit to people with “ok” credit anytime soon. In fact in today’s world having good credit isn’t enough. Only the cream of the crop, those with the highest credit score will see the benefits of sound financial management. So, how can you add precious points to your current score? Here we will look at ways to raise your credit score -in turn increasing your creditworthiness to the powers that be.

• Understand how it works- If you don’t know how your credit score is calculated you are at a distinct disadvantage. Before you can increase your score you have to know what actions help or hurt your score.
• Get your finances in order- We all know the importance of having great credit, however it is impossible to attain this goal if your personal finances are in disarray. If you are dealing with high interest debt, past due accounts or another financial crisis- you need to get a handle on those issues before trying to boost your credit. Once you get your finances in order you can turn your attention to increasing your credit score.
• Use a major credit card (sparingly)- In a world where credit card use has suddenly become taboo, there is still one benefit from using credit. Your credit score tells lenders how you have managed credit in the past, which indicates how you will manage future credit. Without this history on your credit report there may come a time when a credit score will not even be generated. The key is using your credit card responsibly (such as using your card to earn travel rewards points). Do not charge more than you can pay off in full each month. You need to show responsible credit card use, not indebtedness.
• Automate your payments- Paying your bills late will not only hurt your credit but also put you in a position where you have to pay late fees, penalties or higher interest rates. If you have your finances in order there should be no reason for paying your bills late. Take advantage of automated payments and put your bill paying on autopilot. This will ensure your bills get paid on time every month. Late payments have a damaging effect on credit scores. Note: It is imperative you remember what bills are automated to ensure you have the money available when the payments are due, otherwise you may end up paying overdraft fees if payments are returned. Remember also to monitor automated payments to ensure the right amount is being deducted.
• Manage your debt- You don’t have to be debt free to increase your credit score but you will have to pay down debt to decrease your credit utilization. In addition to paying down debt you can also spread your debt around to increase the debt to credit ratio. The amount of debt may be the same, however it is better to have a little debt on several cards, than a lot of debt on one.

Increasing your credit score is a worthwhile endeavor, one that will take some time. Credit scores plummet quickly when you manage your finances poorly however the recovery time is sometimes a bit slower. Be patient and eventually you will be rewarded for managing your credit well.