Better Habits for Better Credit
If you don’t have the kind of credit rating or credit history that you want, then now is the time to do something about it. Whether you simply want to improve your credit score or have sunk into a cycle of debt, there are steps you can take starting today to get better credit.
Always Pay on Time - Every late payment can affect your credit. Late payments can also make it even harder to pay because you are charged extra fees and interest. Late payments are reported to the credit bureaus so they can have a negative affect on your credit score. As soon as you begin to pay on time, you begin to improve your situation.
Don’t Pay the Minimum - The minimum payment for a credit card or other debt is generally not the best option for your overall credit. This is especially true for credit cards, because each time you pay only the minimum, you increase your debt. Whenever possible, pay more than the minimum amount. This will also help you to pay off debt sooner which contributes to a better credit rating.
Pay Off Debts - You should begin to pay off your current debt as soon as possible. A debt that is late or unpaid is extremely damaging to your credit report. If you contact your lender or even a collection agency if things have progressed to that point, you will find that they are usually willing to work out a payment plan that you can actually manage. Try to create a payment schedule that will allow you to begin repaying debt while enabling you to make new and current payments on time.
Don’t Forget Utilities - It is easy to forget that accounts such as electric, gas, and phone services also affect your credit. You need to pay these bills on time as well. If you are moving be sure to close all of your utility accounts. Only open new accounts in your name if you will personally be the one paying the bills.
Establish Positive Credit - Opening new accounts can actually help you to improve your credit. A new credit card or small loan from your bank, credit union or even a department store can be used to establish a better record of paying on time and in full. You can also apply for a secured credit card. The key is to use your new card on a regular basis while paying the credit in full monthly. This is how your create a better credit history.
Watch Your Credit - You should ask for a copy of your credit report from the three national reporting bureaus, Equifax, Experian and TransUnion, yearly. Read the information carefully to make certain that it is correct and up to date. If you notice any errors or inaccuracies, contact the bureau right away to report the problem and insist that they make corrections. Monitor all of your credit information carefully from now on. Your credit rating should slowly and steadily begin to rise.
Balance the Books - Most of us have both a savings and checking account. These accounts are also a part of your credit. You need to handle these accounts as responsibly as the rest. If you keep your records current and treat the checks you write as cash instead of credit, you should be able to avoid bouncing checks. Overdraft protection may be available to help you prevent this, but the most important thing is to keep all accounts balanced.
In order to establish better credit, you need to build a new pattern of always paying on time. If you begin to meet all of your financial obligations, over time your more recent record will improve your credit.