Credit scores are the badge by which consumers are known when it comes to getting a loan or making a major purchase. Low scores prevent consumers from getting the things they need, but reining in their scores with consumer credit counseling and these five tips will help pump up those scores.
Check Your Credit Report
In order to change credit scores consumers must first know where their score stands. Knowing where their credit stands determines how much work will be needed and which areas require the most work. Interested consumers can request their reports from any of the three major credit bureaus. However, they will not see a score number on these reports, as each system evaluates credit reports differently.
Pay Down Credit Cards
Frequent credit card use is a quick way to build credit, and also a fast way to tank a credit score. Consumers with large debts on credit cards can lift their scores quickly if they pay off any debt that they have accumulated on their cards. If their balance falls 30% or less below their credit card limit consumers can improve their scores while paying debts.
Make a Budget
When working with consumer credit counseling, those with excessive amounts of debt are encouraged to make a budget to curb their spending and stick to it. A budget will prevent overspending and help consumers pay off their debts. Even if consumers have good credit they will benefit from a budget, in case they wish to increase spending limits on credit cards or major purchases in the future.
Pay Bills on Time
Late bill payments can rack up costs from late fees, and people are encouraged to pay bills on time to avoid fees. Paying bills on time will avoid such fees as well as severe penalties that could knock a good credit score down quickly. Consumers should keep track of payment deadlines by setting up payment reminders or having their bills automatically deducted from their own accounts.
Use Credit Cards Regularly
Building credit requires using credit, so consumers should use their cards often. Credit scores improve when people open several credit cards and use those cards towards purchases. Consumer credit counseling helps individuals understand how to use their cards properly as well as set up a spending plan that will build credit as well as pay it off. Consumers should avoid maxing out cards at all costs.
Once a consumer’s credit score reaches the ‘good’ or ‘great’ ranges, taking steps to improve credit will have less of an impact than lower scores. Improving a poor credit score depends on building and maintaining good spending habits and the proper ways to use credit through patience, perseverance and discipline.
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Jake Alexander is a free lance writer who enjoys blogging about finance and business. Follow him @JakeAlexander17.