Avoid Getting a Poor Credit Score by Following These Tips

If you have ever had to deal with poor credit, you know how difficult it can be to get it back up. With a poor credit score, you might have trouble getting approved for a loan or only have astronomical interest rates on your existing debt. But bad credit does not have to be permanent. Keep some of these tips in mind to jumpstart your future credit.

1. Check Your Report for Errors

Studies have found that one in five Americans has errors on their credit report. This could be from identity theft or simple data entry mistakes. Regardless of the cause, it can lower your credit score and harm your finances. Get in touch with a credit monitoring company to find out if you have fraud alerts you should watch out for.

2. Dispute Incorrect Information

If you find an error on your report, dispute it according to each agency’s guidelines. The Credit Union of Denver, for example, might have different guidelines compared to another credit union or bank. However, it is always recommended to get in touch to start an investigation. Depending on when the experts get back to you, disputing incorrect information could take anywhere from 30 days to six months.

3. Make a Budget

After fixing errors in your report, it is time to take a proactive financial approach. Take some time to figure out what you need and what you want, and then set up separate accounts for each category of spending. This can help you track your finances and curb unplanned expenses.

4. Pay Your Bills on Time

Your payment history makes up a significant portion of your FICO credit score. If there are any late payments or collections showing up on your report, they could be dragging down your score. The best way to improve your payment history is simply by paying all of your bills on time. The sooner you get started, the better.

5. Use Credit Cards

Credit cards improve your credit score by showing lenders that you have a history of returning payments. Aim to keep your balances below 30% of their limits, as this exhibits your ability to make payments on time and in full. If you carry a balance from month to month, try to pay it off as quickly as possible to avoid paying unwanted interest fees.

If you find yourself in particularly dire straits, do not be afraid to consult with a financial advisor for further advice on what you can do to improve your credit score.

 

Also, read: Best Kept Secrets On How to Save Money On Health Insurance