Charlie Sheen has coined the phrase “winning” even though my bff claims she has been saying it for years. The bottom line is that having a great credit score is #WINNING, …duh! I promise, no more Sheen-isms for the rest of this post, but seriously a great credit score can be the difference between being approved for that car you’ve been saving for, that house you’ve been looking at, and even that job that you just interviewed for that is now pulling your credit history. If you have a low score, the people who decide whether you are an “attractive” candidate hold the cards. If you, however, have a great credit score, you hold ALL the cards. I learned this when I was buying my first home just three days after my 24th birthday. In the midst of trying to prove to my parents that I was in fact a real and financially responsible adult, I was unknowingly improving my credit score. In fact, during the contract negotiation period of the home buying process, my score improved by 20 points. A great score also came in handy once I moved because the majority of my utility expenses did not require a deposit and I was offered a lower rate. No matter what your score is, it is never too late to start improving it.
Here are 5 ways to boost your score:
- First and foremost, it is imperative that you know your score, that way you know where you stand. By law, you are entitled to one FREE credit history report. In addition to your one FREE score, your state may pay for one more. Georgia residents, for example, are entitled to two FREE credit reports from each reporting agency. I would recommend, though, that you order your report from one of the three credit bureaus because we learned in the first week of She Makes Cents that FreeCreditReport.com is NOT free.
- Pay your bills on time. It sounds simple, but I’m going to take a quick flashback to my days as a member of the ESSENCE of CAU dancing on the same field that Drumline was shot. (insert dream bubble here) To be early is to be ON TIME, to be “on time” is to be LATE, and to be late is UNACCEPTABLE (end flashback bubble…now). The same essentially holds true with how you pay your bills. Most people believe that as long as you pay before the due date, you are being financially responsible. Actually, the opposite is true. The earlier you pay your bill, the better. For one, you are certain that your bill will be received by your service provider way before the date. More importantly, paying your bills as soon as you get them can be a quick boost to that credit score. I try to pay all bills within days of receiving my statements and then record the due dates and balance due in my calendar. This allows me a quick glimpse of my monthly financial trends. This is something I recommend to EVERYONE!
- Use only one credit card. If you have more than one card, start paying down the card with the smallest balance first by doubling the minimum payment. Once, that card is paid down, move to the card with the second lowest balance. Double the minimum balance and tack on whatever you were applying to the first card, until that card is paid down, and then so on. Next, choose one card to work with, preferably the one with the lowest interest rate and take the other ones out of your wallet. Freeze them, cut them up, lock them away but whatever you do, do not close them. Closing a credit card can sink your credit score faster than you can say “She Makes Cents”. Don’t do it, don’t do it, do not do it…
- Increase your credit limit. Now that you have been working towards reducing the debt on your existing card, credit card companies should begin to see you as an “attractive” customer. Call your company and request a credit increase. Again, this is not meant for you to start increasing your spending¸ but rather it is opportunity for you to increase your credit to debt ratio. Can anyone say credit score boost?
Pay in Cash. I have said it before and I will say it again. Paying in cash forces you to really consider whether your purchase is right you. Personally, I find that paying for things in cash acts as a visual aid and helps keep me on track with my spending. In swiping a card, I can’t “see” my funds dwindling, but watching your cash go from thick to thin is definitely a sign that you could be mindlessly spending. When you pay in cash, you don’t have to worry about interest rates and hidden charges because cash is king.
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