Your credit score is a massive indicator of whether you will be able to make large purchases in the future. You know the basics, pay your bills in full and on time, but there are some other factors that will help boost your score. We’ve put together the top three tips for improving your credit score that you may not have thought of.
Prioritize Your Debt
If you are squirrelling your money away for a down payment on a home, it’s important that you don’t sacrifice your bills for your savings account. A large chunk of cash won’t mean much if you have a poor credit score because you haven’t been staying on top of day-to-day payments. In addition to paying on time, finding ways to prioritize your different debts can also be helpful. Focus on debt that is the closest to being maxed out. Lenders won’t be looking at the amount of money you owe, but rather the ratio. For example, paying $500 on a $1000 credit card will look more attractive than paying $1000 on a $5000 credit card. That $500 represents 50% whereas the $1000 only represents 20%.
Avoid High Risk
While many people focus very hard on building their credit score, they often forget to that there can be value in not taking action. If you are great at keeping a healthy payment schedule, don’t falter from the routine. Avoid cash advances or using your card at places that may indicate future financial stress. These could be establishments like pawn shops or divorce attorneys. Lenders don’t want to invest in someone who is high risk, so ensure that your choices take that into consideration.
Maintain “Good” Debt
It is a common concern that old debt can have a negative influence on a person’s credit report. This is entirely false. Your credit report will look much more attractive if you have a long history of properly paying your debt. Think of it like a college application; you don’t want your A+ grades from highschool to disappear when they are reviewing your transcripts. In much the same way, you want potential lenders to know that you are responsible and have handled your finances well in the past.
Improving your credit score can seem like a daunting task, but it doesn’t have to be! If anything, this teaches healthy financial habits and allows you to be in control of your money. Did you know that we offer debt relief services in order to help you get back on track? If you are finding that you’ve lost control and are ready to get in the driver’s seat again, check out our personalized debt consolidation services today.