Building good credit is a lifelong process. Most people get started in high school or college with a credit card. Then maybe they rented an apartment, paid for utilities, and got approved for a car or other loan — all of which added to their credit profile.
Over time, credit reports may record all of these actions and patterns of behavior – good and bad. A few late payments or too much credit card debt may leave blemishes on your reports. But you can still take action now to improve your credit over the long term. Here are a few small adjustments you can make that don’t require a ton of effort but can have a big impact down the road.
Check your credit reports annually
Many people either forget to check their credit reports or simply avoid it. However, the information in your credit reports are invaluable to understanding your overall credit health so it’s important to check it at least once a year.
In doing so, you can find out about:
- Your payment history, or your past record of paying all your bills and debts on time
- The age of your credit accounts, to avoid closing old accounts that could actually be bumping up your average credit age and therefore helping your credit score
- Any errors that could be hiding in your report, which you can dispute and correct with the major credit bureaus
All of these factors go into determining your credit score. Understanding what’s in your reports helps you take responsibility for your choices so you can build and maintain better credit. And since you are entitled to one free credit report per year, there’s no reason not to take advantage of it.
Furthermore, if you are confused about what you are seeing in your reports and need help deciphering errors, you can work with a credit repair service.
Make your payments on time
A few late payments may not seem like a big deal, but they do get noted in your credit reports and can hurt your credit score. Since your payment history accounts for 35 percent of your score, it has the biggest impact — positive or negative — on your credit.
One of the best things you can do is to make all your payments on time and in full, including your credit card bill, monthly bills, and loan payments. Making a firm goal to improve your payment history will go a long way toward improving your overall credit.
Pay down your credit card debt
Carrying a balance on your credit card doesn’t necessarily help your credit score. In fact, it can hurt your score if you are not careful.
If you are close to reaching your credit limit or have a high debt-to-income ratio, it could be much harder for you to get another credit card or be approved for a loan. Creditors and lenders look at your debt levels to assess if you are a risk. And too much debt signifies a higher risk.
Take control of your debt by paying more than the amount due every month on your credit card. This will help pay down your debt faster, even if you can only afford $10 or $20 extra at a time. Showing less debt will give your credit score a boost.
Once you have paid down your debt, stick to only making small purchases and paying them off every month to avoid getting back into debt trouble again.
Good habits lead to better credit
Remember: pay attention to your credit reports, make all your payments, and keep your credit card debt low. By incorporating these few simple adjustments to your habits, you should see an incremental improvement in your credit over time.
If you find yourself in need of credit repair, contact the legal credit repair experts at Lexington Law Firm. We offer a free consultation and review of your credit reports. Call us today at 1-800-608-8004.