Improving your credit score is not that hard to do; but financial planners make it sound like such a hard task. There are ways to improve credit scores, you just may have to work at it a bit. If you approach credit score improvement from a step by step process, it is relatively easy.
Ways To Improve Credit Score|Step By Step
Step #1 – Find Out Where Your Money Is Going
- Track your spending.
- Keep 2 logs of everything you spend.
- One log will be for items you purchased which were a “need”.
- The other log is for those items that are a “want”.
Step #2 – Live Within Your Means
- If you are spending more than you are earning, you are probably using credit cards to pay for everything.
- If you are spending more than your paychecks you are probably in debt. To help yourself improve your credit score, keep your debt to a minimum.
- Start an rainy-day fund, so you are not forced to always use your credit cards in an emergency.
- Create a budget for yourself (for the “need” items).
- Cut back your spending on the items listed in the “want” log.
Step #3 – Adjust Your Financial Habits
Improve your credit score by improving your payment history, which makes up 35% of your credit score.
- If you do rack up credit card balances – – – pay at least the minimum amount due every single month on your credit cards. These minimums are usually relatively low amounts.
- Do not miss a credit card payment. Do not make a late payment.
- Missed payments lower your credit scores and credit reports.
- Late payments over 60 days have a damaging effect on your credit scores and credit reports. Late pays over 90 days old can damage your credit reports for up to 7 years.
Improve your credit score by working on your credit utilization ratio; which makes up 30% of your credit score.
- Your credit utilization ratio is your debt to credit ratio.
- The amount of credit you have available to you is compared to the amount of credit that you use.
- To have a good credit utilization ratio;try your hardest to not charge more than 35% of your credit card limits.
Length Of Credit History & Account Mix
You will improve credit score the longer you have credit accounts. The length of your credit history makes up 15% of your credit score. Your payment history and credit limits clearly make up the majority of your credit scores and credit reports. Your account mix only accounts for 10% of your credit score.
One of the best ways to improve credit score is to be aware of your financial habits. You work to earn money to buy things; and that’s terrific; but learn to earn and spend only what you earn. By staying out of debt you can improve your credit score the easy way.