There are few things worse for your financial situation than a poor credit score – a poor credit score can make it seemingly impossible to find a home or car loan (at a reasonable interest rate, at least), obtain a new credit card, or rent an apartment, among many other negative effects. Since you already have to pay late fees, you probably don’t need this added stress.
If you’re wondering how to boost your credit score, have no fear! It is possible to recover and even bounce back with an above-average credit rating, as you’ll see from the tips to improve your credit score provided below. Of course, in addition to following these tips, boosting your credit score requires time and effort.
Paying bills on time is the most obvious tip to build your credit score back up – the ability to do so is one of the most important factors in determining your FICO score, influencing about 35 % of your credit rating.
While completing a payment a day or two late probably won’t have noticeable effects on your credit score, things start to rack up quickly after missing a complete billing cycle. If your payment is more than 30 days late, your credit score could even drop by a massive 100 points overnight!
If the payment is over 180 days late, the credit card company could issue what’s called a “charge-off” and assign the debt to a collection agency. A charge-off will remain on your credit report for 7 years.
Needless to say, not paying credit card bills can have a plethora of negative effects. So, how does one kick a bad habit of being late on payments?
The first thing you should do is keep a record of every credit card use – write them down, type them out, save them in your phone, or any other method you can think of.
If you want to improve your credit rating, you’ll have to make payments on time from now on, so you’ll need to make sure you don’t forget them.
You should also budget. Consider how much money you will need at the end of the month in order to pay your credit card bills, and make sure you have that amount ready to go. To do this, you may need to cut out unnecessary expenses, so consider performing a little audit on yourself to locate them.
You could consider making your credit card payments automatic, too – this way, you won’t need to remember to make them. Of course, if you opt to go this way, you need to make sure enough funds are in your bank account to make the payments, otherwise you’ll incur overdraft fees.