Smart money habits to improve your credit score
Credit to Author: JOSH MASCARIÑAS| Date: Wed, 22 May 2019 16:14:35 +0000
If you own a credit card, you should know what a credit score is. A credit score is a three-digit number that represents your creditworthiness or ability to pay off a loan. This is based on the information in a credit report. Credit scores range from 300 to 850, with 850 being the highest. The higher your credit score is, the better. Banks, insurance companies, and other financial institutions look at a person’s credit score, among other things, to assess a borrower’s credit risk.
If you want to keep your credit card debt in check and increase your credit score, you should focus on building better money habits. Refraining from your old ways of spending and saving money can make a great impact on your credit score in the long run.
Determine your credit score and take the following steps to help improve it.
Only spend on what you can afford
Owning a credit card doesn’t mean you can buy anything you want. . Spending beyond your means can put you in a bad financial situation since you would need to pay off an expensive credit card bill. One of the best ways to improve your credit score is to purchase only what you can actually afford. You don’t want to suffer from debt, right? Follow a budget and consider your basic needs first to avoid debt and guilt.
Pay your dues on time
Staying on top of your bills is important. Your payment history is a significant factor in improving your credit score. If you forget to pay your bills on time, such negative financial transactions can wind up on your credit report, a report that contains a comprehensive summary of all your financial transactions.
Pay your dues on time to boost your credit score. FICO, a data analytics company in San Jose, California that focuses on credit scoring services found out that 95 percent of consumers with credit scores of 800 or higher have no late payments on their credit reports. This only shows that paying your bills on time helps improve your credit score.
Make it a habit to pay your utilities and credit card bills before their respective due dates. Making smaller payments throughout the month will also help you reduce your credit card balance.
Keep your balances low
It’s irresponsible to just max out your credit card. How disheartening is it to see your monthly salary going to just credit card payments? In the end, all you’re left with is a small amount of money to stretch for the rest of the month. Beat this problem by making it a habit to keep your credit card balances low.
In a study by Credit Sesame, a credit and loan management platform in San Francisco, California, it appears that consumers with credit scores of 800 or higher have an average credit card balance of $1,181 while those with scores of 600 or lower have $3,625. These numbers only show that having low balances can help one keep their credit score in good shape.
These habits may be too much for you but think of the benefits you can get from improving your credit score. Once your score improves, you can easily get a loan or another credit card because lenders and banks will see you as a trustworthy borrower. You can also negotiate for higher loan amounts and eventually get a higher credit card limit. A good credit score is like a good credential you can take advantage of to get better deals and better financial history. Make it a habit to monitor your credit report and credit score.
Josh Mascariñas is a content writer at Moneymax. Save money on car insurance, credit cards, and loans when you compare and apply at www.moneymax.ph! Visit our website to know more.
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