Credit scores can represent a very important factor in a consumer’s life and standard of living. That’s because your FICO score can dictate everything from the amount of interest you pay on a loan to the type of home you live in and car you drive, so it helps to pay attention to the events and factors that can affect your scores.
Having astute credit means you’ll typically be offered lower interest rates, and ironically, an even higher credit line than those with lower scores.
Secret ways to improve your credit score
Many people might already know that paying bills on time is important, but a certain segment might not realize just how critical it is in order to keep a good credit history. Even one late mortgage payment might mean the difference between a $1,500 monthly payment and one that rises to $1,700 per month because of the increase in the interest rate.
Tip #1 – Don’t let your bills go to collection agencies
Sure, things can happen whereby you find yourself in a position of not being able to make your minimum credit card payments. In those instances, do all you can to negotiate an acceptable arrangement with the original company instead of allowing it to pass on to a debt collector. For example, this writer was able to get into the American Express special auto-pay repayment plan, instead of letting the debt transfer to another outside firm.
Tip #2 – Don’t charge amounts that nearly or actually exceed your credit limit
Just because we might be offered a $14,000 credit limit doesn’t mean we should run it up to $13,999 or beyond. Keeping the credit card balance at only 35% or less of the credit limit, and actively paying that amount off via timely payments, shows that you can responsibly pay bills and reduce your debt at the same time – without always taking your debt limit up to the maximum allowed and looking desperate.
Tip #3 – Don’t consolidate your debts onto one card, unless it’s an amazing deal
You may see plenty of offers to roll all the balances from all your credit cards onto one card in order to experience “one convenient payment,” but if that means you’ll have a super-high balance on the new card, it might not be worth the damage it does to your credit score. Investigate whether the money you’ll save is really worth the hit.
Tip #4 – Don’t apply for a bunch of new credit cards that you don’t need
Lastly, simply because your favorite retail store offers you a 15% discount or so on your shopping order that day in exchange for applying for their store card doesn’t mean you should take the bait. If you’re not going to use the card – which most likely comes with a high interest rate – it’s best to use an existing debit card instead, and not take the negative consequences that can come with applying for multiple cards within a short period of time.
Knowing tips like these can help consumers play the credit card game for all it is worth in order to make it come out in our favor.