There’s no magical spell for good credit. The only way you can boost your score is by adopting good habits that demonstrate to the financial world you’re responsible with your loans and lines of credit.
If your score isn’t where you want it to be, it’s time to roll up your sleeves and get to work. Make a habit out of the four financial actions below.
1. Pay Your Bills on Time
One of the best habits you can get into is paying your bills on time. It keeps delinquencies and other derogatory marks off your report, which is key to improving your score.
But paying bills on time does more than just cultivate a better score. You won’t have to worry about late fines or extra interest charges if you always hit your due dates.
2. Make More Than the Minimum Payment
Another money-savvy habit to get into is paying off your entire line of credit bill when it comes. Now, this may seem unnecessary when you can keep your account in good standing as long as you make the minimum payment.
While this is true, the minimum payment won’t significantly impact your credit utilization. Your utilization represents how much of your overall limit you use, put into a percentage.
In the financial world, 100% is a bad thing, and it will dock marks from your score. It means you’re maxing out your line of credit, and you won’t have credit available for the next emergency until you pay off your balance.
Emergency preparedness is why financial institution MoneyKey recommends paying as much of your balance as possible. In the case of a CC Flow Line of Credit through MoneyKey, a bigger payment may free up more of your available limit for the next unexpected emergency expense.
3. Monitor Your Report
A credit report does more than just display your three-digit score. Your report is a valuable tool that gives insights into your financial situation:
- Status: It lets you know where you stand right now so you know how much an installment loan, auto loan, or mortgage would cost you.
- Growth: Your report shows the impact of your day-to-day decisions. You can watch your progress as your habits improve.
- Fraud: You can catch errors and fraud. If a scammer opens a fraudulent direct payday loan in your name, it may affect your score. You’re on the hook for any fraudulent direct lender payday loans that may appear on your record until you dispute them.
The Takeaway: Stay Focused
These financially-sound habits are the answer to improving your score, but don’t be discouraged if you don’t ace all of them on your first try.
According to the European Journal of Social Psychology, it could take up to 254 days to form a new habit. More still, it could take even longer to see a change in your score.
Remember this as you try out these new habits. Sticking with it for the long-haul can help you improve your credit.