As young adults, we are still learning all the good’s and bad’s when it comes to being responsible for managing our finances for the future. One of the most crucial things when it comes to managing your money is always making sure that your credit score is perfect. Here are 10 easy budgeting methods to make sure your credit score remains perfect.
1. Paying bills on time
It is not enough to just drop a pile of cash in front of a dealership or a realtor. If you want to purchase nice things or get approved for loans you must make sure that whatever bills you are paying get paid on time. This will show up on your credit history where it will be checked to see if you are trustworthy enough to qualify for certain expenses. The more you pay off bills on your credit card, the better your credit score goes up.
2. Lower your Credit Utilization Rate
The most common problem that we all run into with having a credit card is constant spending and not paying off enough bills on it. The more you spending you do on your credit card without making any payments makes your utilization rate increase where lenders might think you are irresponsible with your spending. Most lenders prefer to partner with people who have very low credit card utilization rates.
3. Track suspicious activity
Another common problem that most people run into with their credit account is credit fraud and honestly, it is not even your fault most of the time. People will try their best in being as devious as they can to get bank information from you online to use your credit card to make useless purchases. Your first immediate action in this situation is to call and cancel your current credit card and order a new one. No one should have to suffer financially because of a fraud scammer.
4. Always leave a Credit Card Account Open
It is most common for some people to have more than one bank account. At the very least, always make sure that you do not deactivate that account. You might be tempted to close a credit card account because it has an outstanding amount that you can just not pay off. But if you do this, the outstanding amount due will still show up on your credit report history until it is paid off. Even if your card has a zero balance, closing a Credit Card account can still hurt your credit score because credit history length makes up 15% of your credit score. Just play it safe and pay off your credit card amount and leave that card alone.
5. Cancel Subscriptions
Don’t worry, It is very common to get caught up in all those little subscriptions that may not cost a lot at first, but having a ton of them can eventually add up to a large amount. For example, if you are paying for both a Hulu and Netflix account and it is adding up a decent amount on your credit card balance, sometimes we have to do a hard sacrifice and let one of them go. You may be losing your favorite show, but you are gaining financial stability which is more important. The fewer subscriptions equal more money you save.
6. Keep Track of your Credit Reports
Most people who usually have a good credit score, like to extend their line of credit. But before you want to increase your credit limit, you must keep track of all your most past and recent credit reports. A credit report is a record of your payment history, debts, and credit management. Order copies from your bank to make sure all your payment history is accurate. If so, this means you can qualify to increase your credit limit by an extra few hundred, maybe even thousands.
7. Talk to other Creditors
Most reliable Creditors are seen as those people who can help you at the very last minute. Even though this might be true, you would be surprised as to how much help creditors can be when you are in a financial situation. If you alert creditors about the possibility that you might not be able to make an upcoming payment, they may even be able to establish a mutually beneficial arrangement on paying down your outstanding balance and raising your credit score back up.
8. Don’t Apply for Other Credit Cards
Since you are already in your credit score repair mode, it would be best for you to avoid applying for any other credit cards and loans. When you apply for another credit card or loan, the lender is going to perform a detailed inquiry check which will review your credit account but will also impact your credit score at the same time. Having zero recently opened accounts opened will indicate financial stability which will boost your credit score.
9. Set up a Budget Plan
Sometimes, constantly putting soo much money towards your credit card without having any money leftover can do more bad than good for your credit score. You need to have a balanced payment plan week by week so you can know exactly how much you need to put towards your credit card while having money available to pay other bills. I mean think about it, if you don’t have a scheduled budget, you will end up putting all your money towards your credit card not having any leftover. This will just end up causing you to go right back to using your credit card soo much lowering your score.
10. Be Patient and Relax
Patience is something that you need to have when attempting to repair your credit score. Your credit score did not go down in just one day, so do not expect it to be fully repaired in just one day as well. Just constantly monitor your credit, keep your spending at a minimum, and pay your debts on time each month, and over time you will see a boost in your credit score.
Managing money at a young age can be a very difficult task. But as long as you take the basic steps, you will have that perfect credit score that you need to succeed in life.
"The imagination is precious. Don't lose it. Don't lose the child in you" Marilyn Manson