Now the first reaction may not be budgets are sexy, when trying to spice things up in your family finances, but if a budget is what helps keeps you on top of your spending by allocating certain funds out to bills, food, gas, entertainment, more power you to! Credit is an important piece of your financial picture that may go unnoticed at times, but it should be just as a priority, if not more. After all, when it comes to the interest rate on your mortgage, loan, and credit cards, the higher the score, the less of a rate, and the more you save each month.
Check Your Report
You never know who your information may have these days with the amount of fraud going on, whether it’s taking your card information at the gas pump, getting your information compromised from a retailer that was hacked, even the other day my father-in-law said he was notified the other day that someone had opened an account in his name. By pulling your credit report at least once a year, you can ensure that all accounts are accurate and up to date. Your credit scores you can now see on your monthly credit card statements, so you can at least watch that every month too to make sure there are no drastic changes.
Make All Payments On-Time
One of the largest portions of your credit score has to do with your payment history. While being a day late does not ruin your credit, although you can get hit with a late fee and maybe even be penalized with a spike in your interest rate, but it’s when you reach thirty days late is when your score will drastically be impacted. By scheduling your payments in advance, on or before the due date, you can be sure to never miss a payment.
Keep the Balance Low
Just as large and important as payment history is your overall credit utilization. The closer you reach to your credit limit, the more your score will fall, so it’s a good idea to pay your entire statement balance off as you receive it, not only for your score’s sake, but also avoiding any interest payments. As you do reach zero balance you may be tempted to close a credit card to avoid charging again, or if you just don’t want the card any longer, closing can actually hurt your score as well as you are reducing your overall credit, so if you have balances on other cards your utilization will increase. If you don’t want to use the card any longer your best bet is to keep the account open but cut up the card.
Minimize Credit Applications
While it’s only a few points that will be reduced by filling out a credit application and having your credit pulled, but enough of them can hurt your score that could cost you the best interest rate on the market, so just keep in the back of your mind to make sure to not fill out an application unless it’s a must in proceeding, such as a rewards credit card or a refinance to save you money.