Having a good credit score is extremely important. If you ever want to get a home, a car, or make any other large purchases that could require a loan, you need to have a good credit score. Having a couple of late bills, or having an outstanding balance on your credit card could make your credit score low. Although it seems like bad credit will loom around you for good, there are many ways that you can raise your credit score. Whether you have bad credit because you did not pay your bills on time, or you have not had a chance to establish your credit, you can raise your credit score and be able to get loans and make purchases that may require loans.
One of the things to remember about credit scores is that even though you may be paying off your credit debt now, and that you have started to pay your bills on time, your past does not leave. A credit score takes into account your past actions, so it is important to stay on the right track, and push your score upwards instead of downwards.
One of the things you want to do if you have bad credit is to make sure that the balance on the credit card is low, and stays low. You want the percentage of how much credit you have versus how much of it you’re actually using to be very small. You will want this percentage to be 30% or lower. Make sure to pay the bill on time, and do not use the credit card if you do not have to. This is to ensure that the balance stays low.
Paying your bills on time is the most important thing a person can do if they are trying to improve their credit score, or they are trying to establish credit. Having a record from month to month that proves that you have paid your bills on time will show that you have financial responsibility to lenders. Not only that, but it will make your credit score skyrocket. 35% of your credit score is based on if you pay your bills on time. If you want to get serious about paying your bills on time, you should get a calendar. You will write down on which day a bill is due, and then you can line that up with the timeline of getting your paychecks. That way, you can budget for your bills on each paycheck, ensuring that they will be on time and you will pay the correct amount paid.
If you are trying to get better credit, do not close any of your credit cards. You may want to cancel the card so you are not tempted to use it, but canceling the credit card will look bad to the credit bureau. Instead of closing the card altogether, try using it for something you already have in your budget, like gas or an electric bill. Just have a recurring payment set up for that, and then pay the bill off right away; you will have the money because bills like that are already in your budget.
If you have multiple credit cards, and some of them have little balances on them, pay them all off. It can be helpful to your credit to have many cards that you pay off, but any balance on the card will look bad to the credit bureau. Pay off all of the little balances, and then have one or two credit cards that can be used for emergencies.
If you have no credit or bad credit, there is no need to obsess over it. Getting your credit score up does not happen over night, and it will take you some time to get that score back up to where you want it to be. By following these tips, you will be taking steps in the right direction to improve your credit score.