When was the last time you looked at your credit score? If it was more than a year ago, it’s a good idea to take another peek. You can do this for free once a year from the three credit bureaus (Equifax, Experian, and TransUnion). Although your credit is not the be-all and end-all to having a good life, it’s important for a number of reasons. Fortunately, no matter what you find when you check your credit, there are always ways to improve your score.
Having good credit is a critical factor in successful adulting. You’ll need good credit to buy a house, rent an apartment, or get a loan. Credit scores range anywhere from 300 to 850. A good score is typically anything 670 or higher. Great or excellent credit scores stand out when a bank is looking to loan you money.
It doesn’t matter whether your score is toward the bottom or closer to the top of this range. Improving — or maintaining — your credit is beneficial no matter what position you’re currently in. Keep reading for three practical tips to improve your credit score.
1. Get a Handle on Your Spending
Spending more than you currently have can be a major setback to your credit score. Contrary to popular belief, keeping a balance on your credit card won’t improve your credit score. Rather, it will only produce higher interest charges, which will hurt you in the long term. Going deeper into debt won’t help your credit situation either. It only shows lenders that you aren’t responsible with your money, making you a lending risk.
If you find yourself reaching for your credit card too often, you may want to consider a secured credit card. These types of cards help you build credit over time by placing a limit on how much you can spend. Essentially, you’re building credit using money you’ve already put down. You will avoid going overboard and into debt or forgetting to make payments altogether.
To cut back on spending, take a look at your monthly spending habits to see what expenses you can eliminate. You may discover payments you weren’t aware of, such as subscriptions you no longer use or fees for food delivery.
Of course, you’ll need to account for your necessary monthly expenses. This includes things such as rent, food, electricity, and insurance. Outside of those items, everything else should be considered nonessential. Getting a handle on your spending will help your credit score improve over time.
2. Pay Twice as Often
Before skimming over it, hear us out on this one! Rather than pay off all your bills at the end of the month, break them up. Make a payment in the middle of the month and at the end of the month. The more payments you make, the more you’re proving to the bank that you are a reliable borrower.
There are several advantages to using this method. First, it can help you pay your balance down faster. Second, it lowers your overall account balances and credit utilization ratio, which may raise your score. Third, doing this allows you to identify how much you are spending each month. This will help you be more money conscious by the end of the month.
To get into the habit of paying twice a month, set up a system to hold you accountable. You may want to set a reminder on your phone for the 15th and 30th of each month. You might also set up a Google Calendar reminder to receive an email on those days. In addition, there are apps available to monitor your spending and notify you when payments are due.
3. Ask a Family Member for a Favor
About 15% of your credit score is based on the length of your credit history. This includes factors such as how long you’ve had each account and the average age of all your open accounts. In this case, older is better. That said, if you are a young adult, you may not have the history to help increase your credit.
If you find yourself in this position, you might want to reach out for help. A reliable relative or close friend can add you to one of their cards as an authorized user. This will aid in lengthening your credit history. As long as this account is in solid condition, adding you as a responsible lender may improve your score.
However, use this tip with caution. Money matters can damage relationships. You don’t want to create a sticky situation with a family member or friend because you were a careless spender on their card. You might also want to have an unofficial contract in place between the two of you. Remember, they are taking a risk on you, so do your absolute best to live up to your promises.
Takeaways
While your credit score doesn’t define you as a person, it does reflect you in the financial sector of the world. That’s important because — like it or not — achieving many life goals depends on your financial standing. Luckily, there are ways to increase your credit score, no matter where you are starting from. Being diligent about your spending habits, making regular payments, and leaning on others can help boost your score.
