You are at home watching your favourite show on TV. You are having too much fun, so you run out of snacks. So you put on a jacket and run outside to get to the closest store. When all of a sudden, you stop and start walking back to your house. Why do you think this is happening?
Well, it's quite simple. You can't go to the store yet because you still owe money. If you always act like this, it's likely that you won't be able to handle bigger debts. And because so many people get into debt every day, they want quick and easy ways to raise their credit scores.
Credit scores help you build a good credit history. If you don't pay your bills on time and don't treat your credit transactions seriously, your credit score will eventually go down.
If you have credit, you need to be responsible enough to pay back what you owe. If you don't, your credit report will show this. Let's say you have a low credit score right now. It's time to start cleaning it up or making it better little by little. How do you plan to do it? Think about the following:
- Start paying your bills on time, and if you can, pay the full amount if you can. Don't leave balances because it will help your score a lot if you don't.
- Join clubs that charge yearly dues and report to credit bureaus. Just make sure you meet all the requirements of the club. Some clubs set up loans, and if you get one, you should pay it back on time. This is another way to make your credit score better.
- Look at your credit report once a year. There are three credit reporting agencies, so you must get a copy of your credit report from each one. Check to see if there are any mistakes, and if there are, you must have them fixed. Before the change can happen, this usually takes about three months. If you want to get a loan, you have to start the process early.
- If you have a credit card, you might want to start paying off the balance until you've reached about 25% of the credit limit.
- If you want to buy a car, it's important to get credit insurance. Having a car is important these days, especially if you need to go places often. Car dealers can help you figure out how to pay for your car. This is called insurance against repossession. It can be costly, but it is one way to improve your credit score and get a car loan.
- If you have a checking account, start the process of getting an overdraft. This means you can write a check for more than you have in your checking account without being charged extra. The extra amount will show up on your bill each month. Banks report to credit agencies, so if you want to improve your credit score, make sure you pay your bills on time.
If you do what was said, you will be on your way to fixing your credit report. Your credit score is the only way you can get credit, so once you've worked to improve it, make sure you stay on the right path and don't get into bad debt again.
Keeping a good credit score takes a lot of responsibility and self-control. Start right away, while you still have room to grow.
