Everyone wants a good credit score, there’s no doubt about it. Unfortunately, building a good credit history can sometimes feel like an overwhelming task. Fortunately, there are some tactics available that can help you build good credit. If you’re struggling to find a way to improve your credit score, check out these super-simple tricks.
1. Tend to Be Late? Automate
Timeliness is typically considered to be one of the biggest factors when determining your credit score. While paying your bills on time can be a huge help when building a great credit history, constantly missing payments or having accounts in collection will hurt your credit immensely. So, if you find yourself constantly forgetting your due dates or struggle to find time to pay bills, automation might be a great way to stay current on your accounts.
Most credit card companies and loan providers offer an automatic payment option, through which your monthly payment or balance will be deducted automatically from a checking or savings account. You can contact your credit card company or loan servicer or visit their website to enroll. With a couple minutes, you might be able to erase any chance of making a late payment ever again. Just keep an eye on the accounts from which your withdrawing the cash – no one wants an overdraft fee or a payment to get declined because you didn’t have enough funds available.
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2. Make Smaller Payments, But More Often
Another big factor that credit bureaus take into consideration is your credit utilization. Using too much of it might be a signal that you’re too dependent on your credit, thus increasing the chances that you won’t be able to pay off the balance in full. Many experts say that you want to keep your credit utilization lower than 30% (and ideally under 10%). However, if you find yourself above that line at the end of the month, you might want to consider making more frequent payments.
Instead of attempting to make one massive payment at month’s end, try to pay off your balance at the end of each week or every time you receive your paycheck. Making multiple account payments each billing cycle is a great way to keep credit utilization down while maintaining the same spending habits. That is, providing your spending isn’t erratic or damaging to your financial well-being, of course. If that’s the case, you may want to consider putting yourself on a more comprehensive budget.
3. Paid Debt Is Good Debt
Many people have seemed to pick up the idea that having old debt on their credit report is a bad thing. As soon as they’re done paying off their student loan or mortgage, they’ll contact the credit bureaus in an effort to have them removed. Did you know, however, that having evidence that you were able to completely pay off a debt is a good thing?
While negative items (such as defaulting on a loan or declaring bankruptcy) are bad for your credit, showing that you were able to efficiently handle a debt is good for your score. Keeping the old, paid-off debts on your report is a super-easy way to increase the quality of your credit history, making it more likely for you to receive the best terms possible. Consider checking your credit report to see what shape your history is in, and what it will look like to future lenders. You are entitled to a free credit report each year from AnnualCreditReport.com and you can see your credit scores for free each month on Credit.com.
It’s important to remember that building, improving, and maintaining good credit is a long-term game. Credit is something that changes over time, and while taking these steps will be a good start, you’ll need to follow up with developing positive credit habits. Providing you do that, however, you should be able to see a positive change in your credit and financial well-being.