3 Things to Remember Before Tackling Your Credit Score
When your credit score has run rampant like an untrained puppy, it needs to be nurtured over time. Your low credit score can be improved when you set a positive personal finance and credit history improvement plan in motion. There are three important factors you need to remember before you tackle your credit score.
The 3 Things:
1. Existing Bills Need Attention
Similar to that puppy mentioned earlier, your existing bills need attention. When a puppy does something he shouldn’t, it’s up to his owner to correct the behavior. Think of the outstanding bills or large credit balances you’re carrying in the same way: they are negative objects standing in your way of moving forward. Unpaid bills are obstacles to improving your credit history, which determines your credit score. Record them using a debts worksheet to help you determine which bills to pay first.
Action: You can take the proper action and pay off existing bills, even if you are struggling to make ends meet. Take a serious and hard look at your budget, including all outgoing and incoming money. If you don’t know where your money goes each month, keep all of your receipts or have a long look at your debit and Visa bill at the end of the month. Keep track of ATM withdrawals as well.
Cutting back on fees is one place where you can start saving yourself some money when you’re struggling with bills and need to tackle your credit score. If you’re being charged late fees, bank fees or ATM fees, make some phone calls and ask to have the fees waived.
Make small minimum payments, work out payment plans with creditors, and reduce the number of times you use fee-based ATMs or fee-based payment services to pay your utility bills. Find a bank that has free checking and does not charge you to bank the way you want, whether it’s with paper checks or paying bills online.
Find a way to earn extra income, or cut back on existing expenses — these are the only ways to “find” more money in your existing budget.
2. You Need to Use Credit
Before you scratch your head, thinking that fictional puppy shared some fleas with you, consider that in order to build your credit score you need to use credit. Avoiding credit cards will not help you improve your credit history or your credit score. This is not an invitation to rack up large balances on your AmEx or Discover cards.
Use and Pay - The most beneficial way for you to use credit cards to improve your credit score is to use credit cards to make small occasional purchases, keeping the balance to an amount you can pay off completely each month. This is not the same as carrying a balance. Carrying a balance costs you more money because you are paying finance charges. Using the card and paying it off on time will improve your credit score over time.
One or Two Cards Only - Another responsible way to use credit is to use only one or two credit cards and keep your purchases below your credit limit. Unless you have an urgent bill or need to travel suddenly, there is no reason to max out a credit card. Maxing out your MasterCard will make it more difficult to pay off the balance at the end of the month, and to stay within your set budget.
3. Have Patience
Just as you wouldn’t expect our fictional puppy to learn everything he needs to know overnight, your credit score also needs some time to grow and develop. As long as you stick to your budget and use credit wisely and within your monthly means, you will be able to improve your credit score over time.
Credit card kiting is one of the only ways some people see to keep their heads above water.