Easy Finance Hacks To Boost Your Credit Score
Let’s face it.Out of all of life’s stressers, nothing can ruin your zen like worrying about your credit score. A poor credit score — anything below 649 on the FICO scoring system — can make it harder to take out a loan or rent an apartment, increase your interest and insurance rates, and even lower your chances of getting hired. The good news is a low credit rating isn’t set in stone; it’s always possible to improve. Taking the steps to boost your credit rating will benefit you emotionally, mentally, and, of course, financially — and it doesn’t have to be difficult either!
Pay bills on time
Your payment history plays a primary role in determining your credit score. Consistently paying your bills late — leaving them 30 days or more overdue — will bring your score down. In fact, a single 30-day late payment can lower a good score by 90 to 110 points. However, “other [creditors] wait until two payments have been missed before forwarding the information to the credit bureaus” explains Crediful. So, research how your creditors report data to the credit bureaus, so you know exactly how a missed payment will hurt your credit score. Also prioritize paying your bills as soon as possible — scheduling automatic online payments can make this easier.
Keep old accounts open
You may be tempted to close old accounts once they’re paid off, but this can actually hurt your credit score. This is because the length of your credit history matters. It comprises roughly 15% of your score. So, the longer you’ve had your accounts open, the better. If, however, you’re concerned about falling back into debt and want to have that peace of mind, you may be better of closing them. Think carefully about what’s best for you.
Reduce your debt
Credit utilization — the amount of outstanding debt you have compared to available credit — represents 30% of your credit score. Reducing your debt will improve your rating. Aim to pay off what you owe and don’t borrow any more. Check your accounts to see how much you owe. Devise a payment plan which prioritizes debt with the highest interest rates.
Change your mindset
A simple way of spending less and avoiding debt is by choosing to find happiness and fulfilment in life — not in money and materialism. Unfortunately, many of us buy things because we think they’ll bring us happiness, even just subconsciously: “I just HAVE to have those new pair of shoes or the latest iPhone and then I’ll be happy!”. But, the enjoyment these things bring us is always short lived and it’s onto the next best (expensive) item. The solution? Fall in love with life. Develop hobbies and passions. Build better relationships with the people around you. Find joy in the small things. The world is filled with wonderful experiences that can make us truly happy without spending money.
Ultimately, keeping on top of your finances will pay off majorly. Being careful not to overspend, paying your bills on time, and reducing debt will eventually increase your credit score. With money being less of a worry, you’ll be better able to enjoy life and all it has to offer.