Your credit score has a big impact on many aspects of your life. If you have a good rating, you are more likely to be approved for a loan with a competitive interest rate. Moreover, a solid score can help you rent an apartment, receive better insurance rates, and avoid paying security deposits for cellphone plans and utility contracts. With so much to gain, it’s worth investing the effort towards increasing your score. Try these steps to help you get started.
Get Free Credit Checks
The first step in making sure your financial life is healthy is to take advantage of a free credit check. The score you receive will range from 300 to 850. A lower score means you are considered high risk for lenders, and a higher score means you can be trusted to repay your debts:
- Poor: under 580
- Fair: 580 to 669
- Good: 670 to 739
- Very good: 740 to 799
- Excellent: 800 to 850
Knowledge is power, and knowing your score allows you to be proactive and take action to increase your creditworthiness. It also allows you to check your report for errors. If you find any mistakes, try to address them quickly.
Avoid Problems at Your Bank
A bounced check or notice of insufficient funds can seriously damage your credit rating, so it’s best to talk to your bank about overdraft protection. When you sign up for this protection, you usually designate a backup source of funds, such as a credit line or a savings account, that you authorize your bank to pull funds from. Then, if you mistakenly try to withdraw more money than you have, your bank protects you by moving the necessary funds into your account.
Pay Bills on Time
Your payment history is one of the factors that can impact your credit score, so it is essential to pay every bill on time. Set up automatic payments for bills that allow for that, and use your online calendar to alert you of due dates for the rest.
Pay Off Your Debts
Your total outstanding debt also impacts your score. Since the interest rates on credit cards are high, begin reducing your debt by first targeting all outstanding credit card balances. While you may feel that you don’t have enough money to get yourself out of debt, creating a budget can help by encouraging you to skip the weekly lattes and yearly beach vacations in favor of paying off debt.
A healthy credit rating can open doors and save you money. To ensure your score is as high as possible, take action today. By taking small steps in the right direction, you will be well on your way to a better rating.