My husband and I have pretty good credit. I don’t say this to brag, especially since it wasn’t always like this. In fact, coming out of college, my credit situation was pretty bad.
So how did I get from there to here? I learned about and did the things that can improve your credit score.
I’ve said it before, but it’s a lot easier to be a parent when you have good credit. If you’re a Mom with less than stellar credit, this post is for you.
It’s all about the Score
Experian.com states that a score of 700 and above is considered good, and 800 and up is considered excellent. This is in a range of 300 to 850.
Now that you know where you need to be, let’s get into some of the ways you can work toward this goal.
Pay your bills on-time
On-time payments are one of the most important things to remember. Always do your best to pay your bills on time.
If you currently have a credit card or a car loan, try to make those payments on or before the due date. If you are having trouble, try contacting the creditor and requesting a different due date that coincides better with your paydays.
Even accounts that aren’t reported to credit bureaus should be kept current to ensure that they aren’t defaulted and reported as so. It will also help create good habits of paying on time.
Pay off all interest and fees
Also, keep in mind, if you can no longer maintain an account and decide to close it, you may still be charged interest and fees on any outstanding balance until it’s is paid or written off to a collections agency.
Keep that balance in mind when making your payments so it can be taken care of as well.
Don’t use it all
Another factor that plays a major part in determining your credit score is your credit utilization. As explained at Experian, it is the amount calculated as your total credit card balances divided by the total available credit limits.
The ideal percentage for credit utilization is less than 30%. So, if you currently have credit cards, try to keep your balances at less than 30% of your available balance.
If you are using all of your available balance each month, lenders will see that and think that you are living beyond your means. This could influence their decision on extending new credit.
If you are carrying a balance, make multiple payments each month, if you can, to bring that balance down faster and improve your credit score.
Overall Credit History
Creditors like to see a well-established history of credit usage. This includes the length of time you’ve had your open accounts, the amount of recent credit applications, and your payment history are all taken into account.
It’s better to have one long term account with good payment history, then having four recently opened accounts.
The last two contributing, factors, new credit applications and types of credit, don’t have as big of an impact. However, when it comes to credit, one or two points can make a difference.
Any time you apply for a new credit card or loan, it’s recorded on your credit report. This is called a hard inquiry and these stay for one year. Multiple hard inquiries, especially in a short period of time, will not only lessen your score, it will also give the impression that you aren’t currently in the best financial situation.
Leverage the information from a denial
If you apply for a card or loan, and are declined, you will typically receive a letter showing why you were declined. If this happens, before applying for credit through a different company, wait until you receive that letter, try to fix the issues listed as reasons for denial, and then try again.
Diversify your credit
Having different types of credit can also improve your credit score. This means having a mix of credit cards and loans instead of just having a bunch of different credit card accounts.
Regardless of the accounts you have open, always make sure to keep them in good standing.
Set the right example
Want your kids to be financially smart when they grown up? You can help teach them good financial skills by setting the right example.
If you don’t have the best credit, use this information to improve your credit score. Your progress will get you into the score range you want to be within.
I was able to do it, and you can do it too!