Seven Effective Ways to Raise Your Credit Score


In today’s trying economic times, households need to be mindful of even the minutest aspects of their finances. Here are 7 steps to raise your credit score.
Pay down debt – Excessive debt decreases your credit score. Postpone most discretionary spending until your credit cards and short term loans are completely paid off. It’s difficult to get out of debt when you continually add to it.

Make timely payments – The most common cause of a low credit score is late or missed payments. Make your monthly credit card payments a priority, and always make sure you make the payment before the due date.

Pay more than the minimum payment – If you make only the minimum payment on your credit card, it can take years or decades to pay down even the smallest principle. Paying more than the minimum payment gives you momentum towards eventually living debt-free.

Use your credit card wisely – Using a credit card properly can be hugely beneficial. It helps build your credit score, and it can provide you with a free, short-term loan. However, the temptation to buy something and not have to pay for it right away can cause you to make purchases you otherwise wouldn’t. Consider using your debit card for luxury purchases. The fact that the money is coming right out of your pocket might cause you to become more frugal.

Talk to your creditors
– If you are having trouble making monthly payments, talk to the bank or finance company that is in charge of the loan. You may be able to alter the terms of the loan so that you can have a lower monthly payment without a negative effect on your score. Creditors are generally open to such negotiations as they prefer a modified loan to one that is in default.

Do your homework– Before taking on any new debts; make sure you realize exactly how it will affect your monthly budget. Consider both the APR and minimum payments along with any pre-payment penalties. For bigger purchases, this is vitally important. To help determine your payments on different mortgages, check out this mortgage payment calculator.

Don’t apply for credit unless you really need it – Each time you apply for a new form of credit, your credit score takes a hit. This is because it is assumed that if you are applying for credit, you need it use it, which is bad for your overall financial profile.

If you follow these seven rules, you’ll be well on your way to raising your credit score and improving the economic health of your household.

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