Let’s face it: your credit score is your lifeline. You simply cannot underestimate the importance of good credit. It determines whether you get that new car, apartment or loan. Since this score is used by banks to reach your credit risk, it becomes obvious that a higher score means lower risk. It makes you a better candidate in the eyes of the bank and helps you to get more affordable interest rates on loans. So, to ensure that you don’t face any trouble getting loans, consider using these three simple, yet effective, tips to increase your credit score.
Limit the Number of Cards
You should avoid taking out too many credit cards in a short period of time. In order to boost your credit score and maintain it, you should minimize the number of cards that you apply for. Why? Because each time that you put in an application for new credit, it comes up on your credit report. And the last thing you want is to be seen as someone who is desperately seeking for credit.
Maintaining good credit requires you to be seen as someone who is balanced and knows where he or she is going with finances. By limiting the amount of credit cards that you go for, you appear responsible. So in short, when you don’t need credit, don’t apply for it. It’s as simple as that.
Focus on Less Debt
You have to be a smart credit card user if you want to effectively boost your credit score. Don’t make the mistake of assuming that you need to carry a considerable amount of debt on your credit cards to maintain a good score. The fact remains that it’s always better to use less credit. You should try and not use more than 10 percent of your given credit limit.
One way to use less credit is to develop the habit of spending less. Try and find cheaper alternatives to your daily spending needs. For instance, if you live in a large state like Texas where the electricity market is deregulated, you should compare energy rates to choose a provider that helps you to save the most money. For context, take a look at ERCOT – a summary of the oversight of the Texas power grid shows how to make sure that you get the most out of your electric service provider and avoid overuse of your credit card.
Don’t Wait for the Due Date
It’s a common habit to wait and pay off the bill once the due date arrives. But it doesn’t have to be that way. You can work your way out of your credit card debt by making smaller payments whenever possible. These micropayments that you make throughout the month will help you to bring down your debt much quicker. But how do these little payments help with your credit score?
When you consistently make micropayments, you bring down your debt utilization ratio. This ratio is crucial, because it makes up for 30 percent of your credit score. While it might seem easier to pay your bill all at once, what’s better for your credit score is to focus on paying whatever amount you can, regardless of the date that you submit payment.
Megan Sullivan is a stay-at-home mother in San Diego, Calif. She has two daughters, ages 15 and 8, who keep her very busy. In her free time, she volunteers at a local church, jogs, swims, spends time with her family and writes about her life. Megan’s proud to say that she’s happily married to her husband of 15 years, Jack.
