Having a descent credit score is vital for every adult.  As a young adult, we can make poor decisions when purchasing things we don’t necessarily need (on credit) that can hurt us later in life, if we do not pay them off on time.  While in college, we may find it easy to get credit cards, which allows us to buy things that we cannot afford.  By the time you graduate, land a great job, and have the desire to purchase a home, your credit history has been damaged.  Unfortunately, those three or four credit cards that you ran up and never paid off (or paid late) has now negatively effected your credit score.  Your credit score is so low that a bank will not qualify you for a loan to purchase that home you want.

If this situation sounds too familiar to you,  here are some ways you can improve your credit score:

  1. Do not open a lot of credit card accounts (reduce them to 2 or 3)
  2. Pay your other credit cards off with a personal bank loan (the less creditors you own – the better)
  3. Stay away from department credit cards (They carry very high interest rates)
  4. Pay your bills on time and often (twice a month, if possible)
  5. Pay more than the minimum amount due (this is how you reduce your interest rate)
  6. DO NOT MISS A PAYMENT!! (This will hurt your credit score)
  7. Dispute credit report errors found (Fixing errors will help your credit score)
  8. Keep track of your spending (Do not spend more than you can handle)
  9. Increase your credit limits (This will reduce your debt ratio)
  10. Keep credit card/debt balances low (This will reduce your debt ratio)
  11. Lower your debt-to-equity ratio (follow steps 8 & 9)
  12. Spend on each credit card monthly (even if you pay it off immediately)
Advertisements