Credit touches almost every facet of a person's financial life. Unfortunately, some people haven't made the best use of credit and as a result, have a less than spectacular credit score. With a poor credit score, a person may lose out of certain types of employment or housing. They will also be subject to receiving higher interest rates on loans, if they are lucky enough to qualify for a loan at all. If you find yourself with a poor credit score, there are steps you can take to help improve it. Here are a few.
Pay Bills before They're Due
Having the habit of waiting until the last minute to pay your bills only increases the likelihood of you being late. To avoid making a past due payment, simply pay your bills well before the due date. By practicing this habit, you will never have to worry about being late ever again. No late reports of payment to the credit agencies keep your credit score from enduring any unnecessary hits.
Mix up Credit and Use it Wisely
If you have one credit card, great. Use it responsibly. However, having a nice mixture of credit on your credit report can do wonders for your score. A mixture of credit doesn't mean having a department store card, a gas card, and a major credit card. It refers to possessing both revolving accounts and installment accounts. Credit cards fall in the revolving account category. Loans, such as those for a home or car, make up the installment account category. For building a good credit score, it's good to have at least one of each.
Stay Away from "Max"
With your credit cards, using them responsibly means keeping the balances they carry low. Try to use only 30% of your available credit limit. Never "max out" your credit cards. This will prove disastrous to your credit score. High credit card balances scare away potential lenders. If anything were to happen to your income, the last thing you would worry about paying would be your high credit card bills. This leaves them vulnerable to default. Stay on top of your credit card bills by keeping the balances down and paying more than the minimum balance due if you can.
The Older, The Better
The older your credit history, the better your score will be. If you have an older credit card that you haven't used in a while, pull it out and put it to work. This gives the impression that you have been using credit wisely for a long period. Positive usage of an old, active account will provide your credit score with a nice little boost.
Check your Credit Report
Finally, always be aware of what's on your credit report. It's good to obtain at least one copy annually. Make sure that it shows no errors, such as accounts that don't belong to you or incorrect reporting of account information. If you notice any errors on your credit report, begin to dispute the information as soon as possible. Also, when disputing, make sure to keep accurate records of any communication between yourself and the credit reporting agencies. Removing errors from your credit report will help improve your credit score. You can get one free copy of your credit report per year. Go to www.annualcreditreport.com for details.
Be proactive when working to improve your credit score. Paying bills responsibly and using credit wisely will afford the greatest benefits to your credit score. Doing these things over time will only compound the positive effects. Start today and before you know it, your credit score will begin to climb.