Your credit score is really no different then the scores you hoped for during exam week in one respect -- the higher the better. Credit scores can have a major impact in your life whether you are trying to buy a home or a car. Some financial industry jobs require high credit scores as well. After all, why would someone hire you to manage his money if you can’t manage your own? If you’ve recently discovered your scores aren’t where you’d like them to be, you can do several things to improve your credit score.
Make it Right
Go through your credit report with a fine-tooth comb and clean up all the discrepancies. This may require a few phone calls and some patience but will pay off in the end. There’s no reason you should be punished for someone else’s debt. Mistakes can happen so -- first things first -- get rid of any debts on your credit report that aren’t yours. Make sure that settled debts aren’t still listed as outstanding, and anything over seven years old should have dropped off. Also, confirm that credit limits are listed correctly to accurately reflect the difference between your balance and credit limit. Research and resolve debts that you weren’t aware of or don't recognize.
Pay Off Debt
Getting rid of your debt might sound like an obvious fix but it can be overwhelming. Pay off the smallest debts and the ones with the highest interest rates first. Calculate a personal spending budget for yourself and stick to it, making sacrifices where you can to get those credit cards and student loans paid off. In other words, be willing to brown bag it and skip a few of those morning espressos to get out of debt. Make credit card payments that are higher than the minimum payment to bring the principal balance down faster.
Avoid Credit Inquiries
Next time you’re tempted to apply for a department store credit card just to save 10 to 15 percent on your purchase, consider how the credit inquiry will affect your credit score. There are two types of credit inquiries: hard and soft. Soft inquiries are inquiries done by you, a prospective employer or a credit institution that you are already engaged in business with, and they don’t hurt your credit score. Hard inquiries are done when you apply for a loan or credit card, and they can negatively affect your credit score. Besides, chances are you’ll wind up paying the 15 percent saving back in interest fees if you do make your new purchase on the department store’s credit card, or you’ll be tempted to spend even more than you can afford.
Late payments are detrimental to your credit score. According to an MSN Money article by Liz Pulliam Weston, a good credit score of 700 plus can be reduced by 100 points because of a single late payment. Gather your bills and mark their due dates on the calendar, as well as your paydays, and coordinate the dates to ensure payments arrive on time. If you are using online bill pay through your banking institution, see if you can set up automatic paydays and allow a proper amount of lead time for payments to arrive. Set a calendar alarm on your mobile phone or see what apps are available through your carrier to help remind you of the due dates.
- three credit cards image by Aleksandr Ugorenkov from Fotolia.com