Running your credit report can give you that queasy, bad report card feeling. But don’t loom and obsess over maintaining good credit. By treading lightly and following these five steps, you’ll be on your way to being financially fit in no time flat:
1. Keep using your credit cards
Seems as if every time we hit a financial snag, the first thing we want to do is go rogue and cut up all of our credit cards. Put the scissors down, take a step back, and think critically for a moment. If you’re simply trying to raise your credit score, cutting up credit cards are more harmful than helpful. If you’re having trouble maintaining healthy spending habits, then by all means put it in the shredder. Always remember that every month counts, so if you can manage your credit cards, keep them.
2. Dispute, dispute, dispute!
Think of your credit report as your golden ticket into the world of sound consumption. Whether you want to rent an apartment, get a car, or simply apply for a credit card, the data in your credit report is crucial for you to stay afloat and get approval. The first step is to run your credit report: <https://www.annualcreditreport.com/cra/index.jsp>. From here, you can start reviewing and begin looking for errors. The key is to dispute! Go through everything meticulously and argue EVERYTHING. Even things you would consider minimal. By law, the credit bureaus must investigate valid claims and remove inaccurate information. In lieu of further trouble be sure to contact Consumer Financial Protection Bureau.
3. Pay down your highest balance
If you have outstanding balances on more than one credit card, it often times seems more feasible to pay off smaller balances first. But, if you’re trying to boost your credit score more quickly and efficiently, start by paying off the card that has the lowest available credit limit. The card with the highest utilization ratio will always negatively affect your score. Be sure to pay that one off first.
4) Mix components, installments, cc etc
It’s been noted that folks who’ve applied for certain types of loans have been denied due to monotonous types of credit. Lenders favor consumers that have a “blend” of different types. Applying for a car loan, credit card, or any type of installment loan is a great way to prove to lenders that you’re able to manage different types of loans. Installment credit is also said to boost credit scores as much as 30 points.
5) Never co-sign on a loan
Think about it. If the bank is smart enough not to loan one of your constituents’ money, shouldn’t you be? Not to mention that co-signing on a loan with another individual puts your credit in the most jeopardy. According to the FTC, depending on the type of the loan, as many as three out of four primary borrowers default on their obligations, leaving the co-signer to pay. This is, after all, why they need a co-signer: they’re not good credit risks, either because they have too much debt already, or because they don’t pay their bills on time. Just say no!