Your credit scores health is vitally important to your finances because of a number of reasons. To begin with quality credit scores are exactly what lenders will be looking for when they decide whether or not they will lend you money. Often times insurance brokers and landlords will look into your credit when determining whether or not to choose you as a potential client or tenant. This article will describe to you a number of ways of improving your credit rating and will help with your personal finance basics.
1. Pay Your Bills On Time
Why this is first on my list is due to the fact that this is probably the most important rule to follow when trying to boost your credit rating. If you visit your financial institution and want to apply for a personal loan the primary item they will search for is if you regularly make bill payments when they are due. These bills include everything from your cable, home or cell phone, credit card or internet bills. Your credit score is determined by whether you make, miss or are a little tardy with your payments. If they see that you religiously miss or are late for payments, chances are they will not approve you for the loan.
Helpful advice so you will make every bill payment:
-Create a new checking account and allocate enough money at the start of every month for your bills so you always have enough.
-Set up email reminders a few days prior to when your bills are due.
-Set up automatic payments with online banking.
-Keep a journal or log of when every bill is due. Update and check it on a regular basis.
-Buy everything possible with cash. No credit card means one less bill to worry about.
2. Never Let Bills Go To Collections
This seems like a no brainer but these collection agency's exist because thousands of people allow their unpaid bills to go this far. You can't ignore your bills. They won't just go away. If just one of your unpaid balances go to a collection agency you are going to pay surcharges, high interest and your credit rating will be shot.
3. Keep Credit Card Balances Low
The most simple of personal finance basics is if you must use a credit card, keep the balance at zero or as low as possible. The less of your available credit you use the better. The number that most reflects your credit score the most recent balance on your statement. Even if you pay your bill in full every month you should never exceed more than 30% of your available credit. The less you use the better.
4. Use Old Your Credit Cards
This may sound strange but don't switch from one credit card company to the next. If you jump around and constantly open and close credit cards your credit score can be adversely affected. If you can use the very first credit card you every had and stay with it. If you have switched to a different credit card, try and keep your old cards active and use it every once in a while. Be sure to pay it off in full each time you use it.
5. Check Your Scores Once A Year
Your credit can get into trouble in a hurry. Today everything might be fine and the next your credit rating could be awful. Checking your score each year is a personal finance basic tip we all must follow. This allows the opportunity to fix any mistakes that the banks or you may have made. Be careful though. If you check your credit score more than once a year or on a regular basis it could also affect your scores negatively. Your best option is to check once a year and only once a year. Be sure to correct any inaccuracies such as missed or late payments when you are certain that they were paid on time or any other problems that you could find.
Having a good credit rating can create the opportunity for lower interest rates on mortgages, car loans, personal loans and credit cards. One of the earliest personal finance basics you need to follow is to keep your credit rating healthy so you can take advantage of many different financial opportunities. The more quickly you can fix any issues with your credit, the sooner you will be back on track with it. By following these tips you will be well on your way to improving the health of your credit score.
