Few topics in the world of finance can be as stress-inducing as credit scores. For anyone who has ever had a low or even just mediocre credit score, the feeling that comes with having that number loom over you, coloring all of your financial decisions, is an unpleasant one to say the least.
Fortunately, raising your credit score doesn’t have to be battle. There are some simple, sensible things you can do to start raising your credit and keep raising it gradually over time. Here are a few examples.
Open Lines of Credit and Use Them
You’ve probably heard before about the importance of opening lines of credit such as credit cards, especially if you are trying to build credit for the first time. But more than just opening them, you need to use them and use them the right way. You don’t want to max out credit cards, for example, but you also don’t want them to sit there with balances of zero, collecting dust. Use your credit cards wisely and maintain a utilization ratio of 30% or below. Make purchases, especially ones that earn you extra rewards points, and pay off the balance as you go. Think of your lines of credit as being kind of like muscles; you exercise them to get good results.
Make Your Payments On Time
This is an obvious one, but the effect of a late payment, particularly a late credit card payment on your credit is hard to overstate. Keep careful track of your payments using a physical or digital calendar and skip over optional purchases if they will ever interfere with your ability to make payments on time. It may seem harmless to fall slightly behind on a payment, but that kind of slackness will quickly catch up with you.
Rome wasn’t built in a day, and your shiny, top-tier credit score won’t be either. Don’t go for quick fixes; go for steady, continual improvement. If you are continually emptying your bank account to make larger payments to keep your credit card balances under control, chances are your spending is what is actually out of control. Make sustainable payments, accept that it’s going to take some time, and build your improved credit score carefully and steadily. The results, and the relief that comes with improving your score, are sure to be worth it in the end.