If you’re trying to get your finances in order this summer, the first place to start is with your credit score. The higher your score, the easier it is to be approved for new loans, lines of credit, and the lowest available interest rates when you borrow money. Having a low credit rating can be from several things, including high credit card debt and unpaid bills. Use this time to make your finances a priority. Here are some easy and simple ways to improve your credit score.
What is a Credit Score?
A credit score is a numerical expression based on a person’s credit files to help predict how likely you can pay a loan back on time. Some factors that make up your credit rating include:
- Your current unpaid debt
- Your bill-paying history
- How long you have had your loans
- How many and the type of loan accounts you may have
1. Review Your Credit Reports
Start by checking your credit history. Knowing where you stand with your finances is the best way to get started. You can get a free copy of your credit report from three national credit bureaus: Equifax, Experian, and TransUnion once a year on the Annual Credit Report website. Take time to review each report, to see what could be helping or hurting your credit score.
2. Pay Your Credit Card Bill on Time
The simplest way to improve your score is to avoid late payments. It takes time to build a good payment history, but every time you make payments on time, it helps increase your score. Not only does each late credit card payment you make lower your credit score, but credit card companies can charge you a late fee. Setting up an auto-pay option with your credit card can help, so you don’t miss any payments.
3. Don’t Overspend on Your Credit Card
During the summer months, it can be easy to find yourself spending more because you’re traveling and going out more due to the warmer weather. Only charge your credit card what you can afford to pay off at the end of the month. If you can’t pay the entire statement balance by the due date, it will hurt your credit score, and you can be hit with credit card interest.
4. Limit Your Request for a New Credit
When requesting a new line of credit, there are two types of inquiries into your credit history. Hard inquiries such as credit card applications, mortgages, and auto loans can all affect your credit score. These typically have short-term damage to your score because banks could take it as you need money and you’re facing financial problems. If you’re looking to boost your credit score, put a hold on applying for new credit for a while.
5. Hire a Financial Advisor
If you’re not sure how to get started hiring a financial expert is exactly what you need. Not only do they know the steps you need to take to improve your credit score, but they will assist you throughout the whole process and make a simple and easy plan to help you get on track.