We don’t want to rain on your parade, but someone has got to do it. We want you to have the best credit anyone wishes to have, but there may be a few things getting in the way of that. We created a list that could help you thrive in the credit world.
1. Dispute Errors: errors are a common mistake showing up on credit reports, errors are considered to be false information, or invalid information. In most cases, they also can be responsible for increasing credit scores. It’s important to ensure your credit report always matches the history you can recall. Often errors could be due to smaller mistakes, like using different versions of your name. Always use the same information. This means spelling your middle name instead of abbreviating it. It’s tedious, but will save you some trouble. Look at your credit reports often, you can pull them from credit bureaus like Equifax, Transunion, and Experian.
2. Keep Your Balance Below the Card Limit: Keeping the balance less than the limit is a good practice to put in place, it’ll keep you from maxing out your cards. Available credit refers to the amount of money you have to make purchases on your credit card. Why is this important? Simply, It shows you can keep your balance low. Just because the balance is under the limit, doesn’t mean you won the gold. You’ll remain in even better standing if the balance remains 30 percent below your limit. This percentage is one of the biggest factors affecting of your score.
3. Stay Up-To-Date On Payments: Another big reason it can be hard to maintain a good balance is due to late payments. When payments are late, and depending on the card service you have, card penalties can be monstrous. Some late penalties range from $25 to $35, and to pay that every time there’s a late fee? It’s sickening. If you really want to improve your score, begin making payments before the due date. Keeping late fees out of the picture by making your payments on time will potentially get you lower interest rates.
4. Don’t Close Your Accounts: Sure, you no longer want that spending temptation, but closing out a credit card account generally does more harm than good. Closing an account can damage utilization ratio, while payments are the highest percentage of impact, utilization will always come in second. Instead of getting rid of your credit cards,
keep one card without a balance on it. This will, without a doubt, increase your credit score. Plus, you can’t just erase bad credit history. It’s there to stay until its fixed.
5. Don’t Apply For More Credit: It’s not bad to apply for more credit. However, it’s not the safest thing to apply for more if the ages of your accounts are young. Another determining factor of low credit scores is often credit is being applied for. Constantly opening new applications sometimes requires a ‘hard-review which can typically stay on reports for up to six months.
A low credit score can be avoided by applying the above to your credit card practices. It can be a daunting experience whether you’re fixing or building credit, but all things take time! Good luck!