5 Habits to Raise Your Credit Score
April 26, 2019
Our credit score can affect many of the aspects of our life. This includes the ability to rent property, mortgage rates, and some employers will even review a credit report before extending an offer to a candidate.
With a credit score being tied to so many lifestyle facets, many are seeking the quick and easy way to raise their credit score, but here’s the catch – it’s a marathon, not a sprint. We’ve prepared our list of 5 day-to-day habits for getting a higher credit score.
1. Pay Bills on Time
Landlords and loan grantors will often use the history of your credit or bill payments as a predictor of future payment reliability or tendencies. Accidents do happen and you shouldn’t be worried about a single missed deadline; instead, they generally look for trends of unreliability for payment.
Occasionally, when payment dates align with travel, visitors, or the holidays, an abstract deadline might be the last thing on your mind. To avoid recurring accidents there are a few tricks to keep up your sleeve:
- If you’re comfortable with it, consider setting up auto-pay. This is a sure-fire way to avoid missed deadlines. We recommend complimenting auto-pay with a text alert of when payment is complete so that you can look for any anomalies.
- Sign up for text and email reminders for the days leading up to the payment deadline. We recommend placing the reminder 2- 3 days before the due day. Any earlier than that and you run the risk of pushing payment and then forgetting the deadline altogether.
- Set up a recurring reminder in the calendar of your phone. Our phone is attached to us nearly 24/7. With how connected we are with notifications, setting up recurring reminders is sure to be noted.
2. Review your Credit Report for Fraud
Often, removing an erroneous/fraudulent black mark from your report will result in an improvement to your credit score. Contrary to popular belief, it’s easy and free to receive a copy of your credit report. You can request a free credit report every 12 months from each of the authorized credit reporting bureaus: Equifax, Experian, and TransUnion. We recommend requesting a report from one of the agencies (and cycling through the agencies accordingly) every 4 months for optimal coverage.
Upon receiving your report be sure to review it carefully, looking for anything that appears out of place. If you notice anything that appears fraudulent, report the respective mark to at least one of the credit agencies. These entities have a reciprocal agreement to share the information accordingly. This should be removed from your report and your credit score will be adjusted accordingly.
3. Pay Off Outstanding Debt by Priority
Life and debt happens. You’re not alone if you yourself are carrying debt. While carrying a large amount of debt month-by-month can have a negative effect on your credit score, the important thing is to take it step-by-step and determine what should be prioritized.
We recommend reviewing all outstanding debt and prioritizing repayment by whatever has the highest interest rate. This will help mitigate it compounding any further.
4. Make Sure Your Cards Are Used
According to a Gallup report, the average number of credit cards per individuals (for those that hold at least 1) is 3.7 credit cards. Some will open credit cards for specific promotions, to make a large purchase at zero interest, to collect travel points, and more. Their other cards normally fall into disuse. This isn’t a great credit-growing tactic for two reasons:
For one, utilizing your available credit is an excellent way to build a positive profile. Secondly, most credits cards will be canceled (not without notice) after disuse. The threshold for this normally ranges from between a year and two years. This is important because closed accounts are considered a negative mark on your report.
To avoid this, we recommend setting a few of your monthly, recurring payments on auto-pay on each of your tertiary credit cards. All it takes is a single charge to keep it active. For example, Spotify is a static expense that is an excellent candidate for auto-payment on a card you don’t use day-to-day. Your gym membership, Netflix, or a meal subscription are all excellent options as well. Take a look at your monthly bills and determine what you’re comfortable setting on auto-payment to your additional credit cards.
5. Consider a Credit Counselor
Sometimes we all need a little help. A credit counselor may be a good option if you’re living from paycheck to paycheck or can’t seem to get a handle on budgeting. Working with a certified credit counselor can help you with debt management, work with you to develop a budget, or even assist you in preparing for retirement.
When considering a credit counselor, be sure that they are a reputable, accredited individual or organization. You should ensure they are registered on the U.S. Department of Justice list of accredited agencies. Moreover, many counseling agencies identify as non-profits, however, that does not mean their services are free. Be absolutely certain to receive a price quote for their services.
We hope these day-to-day habits and changes will have you confidently on the way to a better credit standing. Need some additional help? Illinois Lending offers a better way to borrow. With in-store and online loans, we’re the best alternative to payday loans. Learn more today.