Your credit score can impact everything from the rewards cards you’re able to apply for to how many followers you have on social media. Ok, maybe not that second one but you’d be shocked at how often your credit score is referenced as a means of assessing risk! That’s why it’s so important to make sure you’re doing everything you can to consistently build your credit score. Unfortunately, merely paying your credit card bills on time can only do so much but fear not! We’ve put together a list of actions you can start taking today to get that credit score climbing the fiscal ladder of excellence.
Set your calendar reminder
Paying your bills on time is the easiest place to start when beefing up that credit score. Payment history is one of the largest pieces of data that impacts your score and late payments can seriously ding your report. Even just one delinquent payment can stay on your credit report for more than 7 years – not the type of long-term financial baggage you want in your life. So get those due dates in order and be sure to pay everything on time.
Speaking of paying on time…
Almost all bills will have a monthly payment schedule but making smaller and more frequent payments can be a great way to improve your overall credit score. While making these small payments may seem trivial, it helps to improve your credit utilization. The smaller your balance in relation to your credit limit, the better your credit utilization. The better your credit utilization, the better your credit score!
Friends like these
If you have family or friends with excellent credit you might want to consider asking to become an authorized user. This allows the credit holder to place you on their account as a user and they actually don’t even need to let you use the credit card in order for you to reap the benefits. Of course, the very nature of this arrangement can be pretty personal so be sure both sides are comfortable with an authorized user relationship to avoid headaches in the future.
Sweat the small stuff
Credit errors and reporting inaccuracies are a nasty nuisance that can seriously damage your credit score. We’ve gone over finding and fixing reporting errors before but making a habit of checking your credit report is a must. Get used to what you see on the report and if anything fishy pops up, go about the business of having it fixed as soon as possible. Check out our post on fixing credit errors HERE for information on how to handle these hiccups.
Increase your credit limit
This is another way to use credit utilization to your advantage. If your overall credit limit increases while your credit owed balance remains the same, your credit utilization ratio goes down. If you have a history of paying bills on time or you’ve recently gotten a promotion leading to extra cash in your pocket each month, call your credit providers. You’ll want to make sure you can increase your limit without having to trigger a hard credit pull which can temporarily negatively impact your overall score.
Keep your options open
While opening up a wallet’s worth of credit cards might not be the soundest financial decision, you also don’t want to close the cards you already have. Again, it all comes down to credit utilization. Even if you aren’t using particular cards anymore, that’s still a credit limit factored into your utilization score. Remember, in order to lower your utilization you either want to a) reduce what you owe or b) increase how much you can borrow. So keep those old department store credit cards on the back burner to take advantage of the credit limit you worked so hard to achieve!
Play the field
Mixing up your credit types is a great way to diversify your credit portfolio. If you’ve only got a few loans and no credit cards, or vice-versa, consider opening up an account with a credit type you don’t have. Varied credit accounts help spread out your utilization ratio thus increasing your credit score.
The more active you are in your credit-building journey, the more effective you’ll be at controlling your score. Educating yourself on all the different tools at your disposal will not only make you a more astute consumer, but a more accomplished financial wellness expert for life.