The rush to get ourselves ready for the holiday season can often lead us to overspend and leave us wondering in the new year, how we are going to manage to pay our bills. If we do not manage our credit wisely, we can get ourselves into trouble, leading to a diminished credit score and fewer available good options when it comes to borrowing in the future. It can become a downward spiral until we are proactive in turning the situation around. The following are some tips to help you both prevent your credit from worsening and improving the credit score you already have.
Tip #1 – Pay your Bills on Time
Even if you make the minimum payment, paying your bills on time is probably the most important factor for keeping your credit score in good condition. Late payments can and do bring down your credit rating.
Tip #2 – Don’t Apply for Credit on a Regular Basis
Don’t be a victim to the intense marketing strategies of various retailers that offer you credit every time you are at the cashier. These applications are sent is and do negatively affect your score if they are numerous and frequent. Chose your credit wisely as the store incentive for signing up may not be worth it in the end.
Tip #3 – Try to keep your credit balance to under 30% of your maximum credit limit
While it is good to carry low balances to establish and improve your credit, carrying high balances has the opposite affect. Continued high balances looks like you are not able to handle your credit wisely.
Tip #4 – Don’t close out too many of your older credit cards
In keeping with tip #3, you want to continue the optics that you are good with credit. Therefore, having some credit cards which you have had for a long time shows your ability to manage your credit over the long term.
Tip #5 – Don’t buy too much on credit all at once
Again, back to optics, if you make too many purchases on credit around the same time, it gives the appearance that you are not financially stable.
Tip #6 – Don’t Pull your Credit Score too often
Like Tip #5, you should not have your credit score pulled too frequently. Every time you apply for credit, including a pre-approval for a mortgage, retailers and banks pull your credit. While credit card pulls are looked upon more negatively than those pulled by say auto retailers and banks, nevertheless, too many pulls will ultimately reduce your credit score.
Tip #7 – Try to avoid disputes going into Collections
Many of us do get into disputes over credit related issues and often rightly so. However, it is best from your credit score point of view, to try to reach an arrangement, pay the account and close it, rather than force the creditor pursue a collections remedy. A collection on your credit report will reduce your score and scare away creditors you wish to borrow or purchase from.
Tip #8 – Don’t go over your credit limit
Unlike some situations, were it is easier to ask for forgiveness rather than permission, when it comes to credit, you want to try an seek a credit increase before a purchase rather than go over your limit and suffer the consequences of a credit score reduction.
Tip #9 – Fix Mistakes on your Credit Report
What you must bear in mind is that your credit score is your responsibility and whether it goes up or down very much depends on your debt management. And, there are times when the credit companies make mistakes. It is imperative that these mistakes get corrected as quickly as possible and it is the consumers responsibility to follow up and do so. The credit bureau will provide assistance and important information to help you. This will go a long way to improving your score as errors will negatively affect your credit score.
Tip #10 – Make Sure Collections are noted as paid as soon as possible
Much like Tip #9, make sure your credit report accurately reflects your situation. If you have paid a collection, ensure that the collections agency follows up with the credit bureau company to ensure the collection is properly noted as paid, and if possible removed from your credit bureau.