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Building A Good Credit Score: 5 Tips

Building A Good Credit Score: 5 Tips

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    Having a solid credit score has been important for quite a while now, but it’s actually becoming more important these days as lending tightens up. There’s a reason that the Fair Isaac Corporation — the organization that calculates the credit score that most major lenders rely on — has been changing the way that credit scores are calculated. All of these circumstances add up to the fact that even someone who is confident that their credit score is good should be making sure it stays that way. There are some relatively simple steps, though, that you can take to help yourself build up your credit score, as well as maintain it.

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    1. Get A Copy of Your Credit Report

    Although you can’t get your exact credit score for free, you can get a free copy of your credit report from each of the three credit bureaus (Experian, Equifax and TransUnion) once each year. To do so, visit AnnualCreditReport.com and request a report. AnnualCreditReport.com, by the way, is actually the only way to get your reports for free — the site was created in response to federal legislation requiring that the three national credit reporting companies inform consumers about their status. Despite their catchy commercials, companies like FreeCreditReport.com actually wind up charging you for expenses related to obtaining your credit report.

    2. Make Sure You’re Aware of Any Existing Accounts

    Typically, your credit report will show any accounts you have open — although different companies report to different credit bureaus, and some companies don’t seem to report at all. It’s easy to forget about credit accounts that you don’t actually use, like credit cards you stopped using but chose not to close the account ‘just in case.’ These credit accounts can easily represent the most likely upcoming dings to your credit: card companies and other lenders have started closing inactive accounts in order to limit their liability. As the amount of credit a person has goes down, so does their credit score. I’m not suggesting that you should start charging items to those inactive accounts, though — instead, it’s enough to be aware of them so that if your accounts do close, you won’t be taken by surprise.

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    3. Set Up Automatic Payments

    One of the easiest credit score factors you can control is how good you are about making payments on your current balances. Even if you don’t usually carry a balance, making a payment or two late can cause a preventable dip in your credit score. A simple slip up, like forgetting to send a payment, can have some major consequences. While FICO scores will be offering more leniency for someone who misses only one payment, automatic payments can be a simple way of avoiding even one late payment and any problem at all. Late and missed payments can have ripple affects beyond your actual credit score as well — in some cases, including credit cards, a missed payment on one account can lead to a higher interest rate on another account.

    4. Get Serious About Your Balances

    One of the factors in a good credit score is how much credit you have available. That means that reducing your current balances has a direct connection to helping your credit score. That doesn’t mean that you have to pay off your entire balance immediately to improve your credit score, though: while it’s a good overall goal, just adding a few dollars to your minimum monthly payment is enough to at least get you started on an upwards trend. Moving around debt, say to a zero-interest credit card, doesn’t actually help with your overall credit score. While it may make the amount easier to pay off, it can be reflected in your credit score as an inability to manage your existing credit.

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    5. Keep Your Number of Cards Constant

    While your available credit is a key factor in your credit score, opening a bunch of new credit cards just to increase the amount of credit you have available won’t really help. Instead, the system used to determine credit scores reads such a move as a need for more credit: if you open several cards in a short time span, credit reporting agencies assume that you plan to use that credit and might even be planning to get yourself into some trouble with it. Closing unused credit cards can also have a negative impact on your credit, so keeping your number of cards constant is usually the best compromise between getting the best credit card options and maintaining your good credit score. Your account age can also play into things, by the way. That first credit card you ever got, with its awful interest rate, may be an important part of your credit score. Think carefully before closing such an account.

    Your Credit Score and You

    Despite many ads to the contrary, there is really no way to fix your credit score in a hurry. The Fair Isaac Corporation works hard to make sure that credit scores indicate how you use credit over time, and the company knows what it’s doing. That means that you have to work on maintaining a good credit score long before you want to make a big purchase, like a house or a car. Since it’s not always predictable exactly when a person is going make those large purchases, it makes sense to make a good credit score an ongoing priority.

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    Last Updated on January 2, 2019

    7 Steps For Making a New Year’s Resolution and Keeping It

    7 Steps For Making a New Year’s Resolution and Keeping It

    Are you keen to reinvent yourself this year? Or at least use the new year as a long overdue excuse to get rid of bad habits or pick up new ones?

    Yes, it’s that time of year again. The time of year when we feel as if we have to turn over a new leaf. The time when we misguidedly imagine that the arrival of a new year will magically provide the catalyst, motivation and persistence we need to reinvent ourselves.

    Traditionally, New Year’s Day is styled as the ideal time to kick start a new phase in your life and the time when you must make your all important new year’s resolution. Unfortunately, the beginning of the year is also one of the worst times to make a major change in your habits because it’s often a relatively stressful time, right in the middle of the party and vacation season.

    Don’t set yourself up for failure this year by vowing to make huge changes that will be hard to keep. Instead follow these seven steps for successfully making a new year’s resolution you can stick to for good.

    1. Just pick one thing

    If you want to change your life or your lifestyle don’t try to change the whole thing at once. It won’t work. Instead pick one area of your life to change to begin with.

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    Make it something concrete so you know exactly what change you’re planning to make. If you’re successful with the first change you can go ahead and make another change after a month or so. By making small changes one after the other, you still have the chance to be a whole new you at the end of the year and it’s a much more realistic way of doing it.

    Don’t pick a New Year’s resolution that’s bound to fail either, like running a marathon if you’re 40lbs overweight and get out of breath walking upstairs. If that’s the case resolve to walk every day. When you’ve got that habit down pat you can graduate to running in short bursts, constant running by March or April and a marathon at the end of the year. What’s the one habit you most want to change?

    2. Plan ahead

    To ensure success you need to research the change you’re making and plan ahead so you have the resources available when you need them. Here are a few things you should do to prepare and get all the systems in place ready to make your change.

    Read up on it – Go to the library and get books on the subject. Whether it’s quitting smoking, taking up running or yoga or becoming vegan there are books to help you prepare for it. Or use the Internet. If you do enough research you should even be looking forward to making the change.

    Plan for success – Get everything ready so things will run smoothly. If you’re taking up running make sure you have the trainers, clothes, hat, glasses, ipod loaded with energetic sounds at the ready. Then there can be no excuses.

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    3. Anticipate problems

    There will be problems so make a list of what they’ll be. If you think about it, you’ll be able to anticipate problems at certain times of the day, with specific people or in special situations. Once you’ve identified the times that will probably be hard work out ways to cope with them when they inevitably crop up.

    4. Pick a start date

    You don’t have to make these changes on New Year’s Day. That’s the conventional wisdom, but if you truly want to make changes then pick a day when you know you’ll be well-rested, enthusiastic and surrounded by positive people. I’ll be waiting until my kids go back to school in February.

    Sometimes picking a date doesn’t work. It’s better to wait until your whole mind and body are fully ready to take on the challenge. You’ll know when it is when the time comes.

    5. Go for it

    On the big day go for it 100%. Make a commitment and write it down on a card. You just need one short phrase you can carry in your wallet. Or keep it in your car, by your bed and on your bathroom mirror too for an extra dose of positive reinforcement.

    Your commitment card will say something like:

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    • I enjoy a clean, smoke-free life.
    • I stay calm and in control even under times of stress.
    • I’m committed to learning how to run my own business.
    • I meditate daily.

    6. Accept failure

    If you do fail and sneak a cigarette, miss a walk or shout at the kids one morning don’t hate yourself for it. Make a note of the triggers that caused this set back and vow to learn a lesson from them.

    If you know that alcohol makes you crave cigarettes and oversleep the next day cut back on it. If you know the morning rush before school makes you shout then get up earlier or prepare things the night before to make it easier on you.

    Perseverance is the key to success. Try again, keep trying and you will succeed.

    7. Plan rewards

    Small rewards are great encouragement to keep you going during the hardest first days. After that you can probably reward yourself once a week with a magazine, a long-distance call to a supportive friend, a siesta, a trip to the movies or whatever makes you tick.

    Later you can change the rewards to monthly and then at the end of the year you can pick an anniversary reward. Something that you’ll look forward to. You deserve it and you’ll have earned it.

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    Whatever your plans and goals are for this year, I’d do wish you luck with them but remember, it’s your life and you make your own luck.

    Decide what you want to do this year, plan how to get it and go for it. I’ll definitely be cheering you on.

    Are you planning to make a New Year’s resolution? What is it and is it something you’ve tried to do before or something new?

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