Are you struggling to build, or even rebuild, your credit score? If so, you’re not alone. According to FICO, about 15% of consumers have what is considered to be poor credit scores, which is below 600. Poor credit can severely affect your financial wellness and prohibit you from accessing financial opportunities and resources that can further your financial goals. For example, without a good credit score, you lack access to better rates on different types of insurance, qualifying for lower credit card interest rates, approval for higher credit limits, more housing options, and more.
On the bright side, by implementing a bit of planning, organization, and responsibility, you can improve your credit score over time and become qualified to access more financial benefits. Here are a few ways to improve your credit score:
Pay Bills on Time
The main component of your credit score is your payment history. Therefore, negative reflections of your payments, like missed or late credit card payments, could have lasting effects on your credit score. Plus, many of these bad habits have immediate repercussions, like late payment fees added to your balance.
A few strategies that can assist you in keeping yourself accountable with your bill payments are creating a budget, setting up automatic payments, or creating digital alerts to remind you that a payment due date is approaching.
Consistently Review Your Credit Report
Because many of the consequences of having and using credit aren’t immediately tangible, it’s easy for it to become forgotten about and left aside. Planning to review your credit report every year will allow you to figure out what factors affect your score most and know where you stand.
Major credit bureaus offer free annual credit reports. Requesting and reviewing your report consistently will allow you to keep track of your credit standing. This can help with addressing and improving any problem points.
Pay Your Overdue Bills
Unpaid bills will harm your credit score. You can adjust your budget to include allocations towards both current and outstanding bills. This might mean sacrificing some leisure spending. However, getting your accounts up-to-date will allow you more spending freedom in the future.
Keep Credit Available
Credit lines offer you a limited amount of usable credit. How much of that credit you leave available reflects that you responsibly handle your credit and aren’t overspending. Financial professionals often recommend using less than 30% of your available credit, which also lowers your bill amounts, making it easier to pay off and build your credit score.
Talk To Your Trusted Advisor
Meet with your trusted financial advisor to help you develop a feasible plan to build your credit. That plan might include a sustainable budget involving consistent bill paying or selecting credit lines that would benefit you most.
At TrueNorth Wealth, our primary goal is to ensure you achieve financial security. We offer fee-only financial planning, investment planning, and retirement planning services that are catered to your needs and developed so that you can achieve a sound and secure financial future.
To learn more or schedule a no-cost consultation, visit our website at TrueNorth Wealth or call (801) 316-1875.