Managing your personal finances is very important. While personal financial management includes saving money, investing, and living within a budget, it also means having a strong credit score. With a good score, you will qualify for lower interest rates on mortgages and other forms of debt. A low score could disqualify you from being approved and can also impact your ability to find a home, get certain jobs, and lead to other challenges. Fortunately, there are various ways that you can build your credit score over time.
Check Your Report
The first step in building your credit and improving your score is checking your credit report. Your credit report is a record of all open accounts, recently closed accounts, and payment information. If you notice that there is inaccurate information on the report, it could be a mistake or be an indication of fraud. In either situation, you will want the incorrect information removed as it could be impacting your score. Once it is removed, it could lead to a significant improvement in your score. Monitoring your credit and adding a freeze could prevent this from occurring.
Pay All Bills on Time
Your history of making timely loan payments is the largest contributing factor to your overall score. If you have missed or been late on payments in the past, there may not be much you can do about it. However, you can improve your score over time by making all payments on time going forward. Within a couple of years, you will notice a big improvement in your score.
Pay Down Credit Card Balances
Most consumers today have credit cards and utilizing them properly can actually lead to an improvement in your credit score. Unfortunately, many people fall behind and will accumulate debt. If your total revolving debt exceeds more than 25% of the total credit limits, it can start to affect your score. If you are able to pay down the balances, it can immediately improve your score. If you are not able to, finding ways to pay the cards off over time is important and will be a great way to improve your credit.
Ultimately, your credit score is a very important part of your overall personal financial health. With good credit, you can qualify for loans to buy homes, cars, and other key assets. While your score can take a long time to build, there are ways that you can improve it. These tips will help you improve your score and keep it high for when you need it.
Resources
https://www.investopedia.com/how-to-improve-your-credit-score-4590097
