Do you truly comprehend the importance of and impact your credit score has? Are you looking for simple tips to improve your credit score? Do you realize that this three digit number greatly contributes to or inhibits your financial future, your personal potential, and ultimately what you accomplish in life? Strange, but true, that a three digit number largely impacts whether or not you obtain a certain job, obtain desirable interest rates, qualify for loans, etc.
Here we will take an in-depth look at 6 tips to improve your Credit Score honestly and conservatively. There’s much false information on the web in regards to how exactly you can lower your credit score. We attempt to set the record straight for good.
How Important Is It (credit score) Really?
Having a high credit score is absolutely essential in our day and age. In fact, I would argue that your personal credit score is just as, if not more, important than your GPA, jobs and titles held, education obtained, standardized test scores, and bank account balances.
A Credit Score Is More Than Just a Three Digit Number
Interestingly enough, the most important thing to know and remember when looking for tips to improve credit score, and what many people fail to recognize, is that this all-important three digit number often reflects a person’s character, attributes, and habits. Let’s not be ignorant of the fact that situations in life often result, such as job loss or medical conditions, where regardless of a person’s intent, habits, or integrity, credit is ruined. And yet, generally speaking, paying bills and our creditors on time is just as much about maintaining a high credit score as it is about maintaining integrity and dependability (here are some great tips to cut spending and saving money). It is this honesty, dependability, punctuality, and integrity that correlate with obtaining a high credit score which will likewise carry over into every other aspect of our lives. Is it not this type of character that is at the foundation for not only happiness, but any success in life? (If you need some help in this area, the FTC has some great tips on spending, saving, and budgeting your money wisely).
Honesty + Dependability + Punctuality + Integrity = High Credit Score
It should thus be evident that this simple three digit number actually communicates to a potential employer, landlord, or lender whether or not you are a person of their word. If your credit report says that you are not such a person, you will either be denied, or you will literally ‘pay for it.’ That is why it is so important to find and follow useful tips to improve your credit score! Simply put, your financial future, your ability to obtain funds, your opportunity to get low interest rates, your qualifications for a certain job, and many of your future successes are largely dictated by what these employers and financial institutions see when they look at this three digit number of yours, called a credit score!
Tips To Improve, Build, & Protect Your Credit:
The question now is … ”What do I do?” How do I improve my credit score, how do I build credit, how do I maintain my good rating, how do I protect my score, etc.? Below are listed six simple, yet essential, tips to help anyone improve, build, and protect their credit score.
1. Understand Good Debt & Avoid Bad Debt:
Did you know that there is certain debt that is actually ‘good’ debt? In my opinion, there are about three things that fall under the umbrella of ‘good debt.’ They are: obtaining an education, purchasing a house, and investing in a business or asset that actually makes you money. Simply put, everything outside of this criteria would be considered ‘bad’ debt (or ‘consumer debt’). Using borrowed money for ‘good debt,’ even if it initially affects your credit negatively, is good debt. Any other purchase made should be made with this question in mind: Is what I am purchasing an asset that will make me money? If not, don’t use debt to buy it – pay cash! Never follow tips to improve credit your credit score that advise you to create more bad debt to pay debt.
2. How Your Credit Score is Determined & What To Do About It:
Your credit score is determined by 5 categories: 35% of your score is measured by your ability to pay bills on time; 30% is based on the total balance on each credit card and loan compared to total credit limit (lower the better); 15% for length of credit history (longer the better); 10% for new accounts opened, credit inquiries, or applications for credit; 10% for mix of and types of cards and loans. Knowing this information clearly suggests you should: pay your bills on time, make every payment, never use more than about 25% of your available credit, keep credit accounts open, limit new credit inquiries and applications, and ensure you have various types of cards, loans, and lines.
3. Understand That Credit Cards Are A Necessary Evil:
You would be wise to eliminate from your minds that credit cards are bad. The problem is not with the plastic, the problem is a lack of self-discipline from the owner of the plastic! In order to build credit, you must not only have credit cards (yes – more than one), but also use them properly. Using them properly essentially boils down to a few things: 1) Never using more than 25% of your credit limit; 2) Paying your balance in full every month; 3) Never using credit for ‘bad’ debt, and if so, ensuring you have cash to pay for it in full at the end of the month.
4. Increase Your Available Credit Limits … Often:
Credit card companies and banks are happy to increase the available credit limit to those with historically good credit. My rule of thumb is that every six months you should be calling your creditors and increasing your available credit limits. Keep in mind that the reasoning to do this is certainly not to increase your spending limits; the purpose is to increase your credit availability which lowers your debt-to-credit ratio (which improves your credit score).
5. Tips to Protect Your Identity:
While this may be obvious, many people need to be much more cognizant to ensure they are protecting their social security number, bank account information, and any other personal or financial information. Make it a habit to check your credit score and report often to ensure that there are no mistakes, improper inquiries or loans, and to know what/how to improve your score. Remember that if you have children, protecting their credit and getting identity theft protection for them is vital to ensure their future financial success is not hindered.
6. Use Identity Theft Protection:
I take no reservation in saying that in our day and age, identity theft protection is just as important as life insurance. It is an investment that is essential to you and your family’s protection, financial security, and eventual financial independence. Perhaps the most important advice I can give is to insure yourself and your family with identity theft protection.
If you follow these 6 tips to improve credit score, you can start or continue to enjoy the benefits of a high credit score.
