Give Your Credit a Boost
Your credit score is a reflection of not just your everyday spending habits, but also the way you’ve managed your credit over time. These are things like your payment history, amounts owed, length of credit history, new credit and the types of credit you use. If your score isn’t where you’d like it to be, consider one of these steps that could give it a quick boost.
Increase your credit limit.
Simply increasing your credit limit could lower your credit utilization ratio, which is the percentage of your credit limit you actually use. The amounts you owe account for 30 percent of the way your credit score is determined, so if you’re close to maxing out your cards each month — even if you pay them off in full — you could be hurting your standing.
A good rule to live by is to keep your credit utilization ratio below 30 percent. So, for example, if your credit limit across all cards is $5,000, you don’t want to charge more than $1,500 in any given month. If you want to spend more, increase your credit limit by giving your lender a quick call.
Set up bill payment reminders.
It’s essential to pay your bills on time. While one or two 30- to 60-day late payments won’t necessarily cause your score to drastically drop, making just one 90-day late payment could damage your credit for up to seven years. Set up automatic bill payment reminders using a service, which sends you reminders one, three or seven days before your bill is due via text or email. Setting up bill pay reminders not only helps keep your credit rating high, but it also helps save you money on late fees.
Rework your budget.
If you’re not able to pay off your credit card balance in full each month, rework your budget to make more room for higher payments. Paying more than the minimum amount due on your bill not only helps you to pay less in interest over time, but it can also give your credit score a boost. One factor of determining your credit score is how many of your accounts have balances, which means the faster you can pay off a card in full, the better. If you have several credit cards that carry a balance, try to eliminate them one by one, rather than just making minimum payments across all.
Monitor your credit report.
Check your credit report at least once a year for any errors or issues of fraud. It’s a common, yet preventable, reason people find themselves with a lower score.