It’s often inevitable for business organizations and individual entities alike to borrow money at one point in time. Your credit score — which is a number between 300 and 850 — is a measure of how worthy you are to be lent money to. And many of those who want to beef up their cash flow and expand their portfolio invest in doing a credit repair to help achieve a certain score.
In this article, we’re giving you credit education 101 as we run down 7 essential tips on how to hit the credit score of your dreams.
Check your credit reports. Of course, you have to know first where you currently stand in order to have a realistic strategy on how to reach a realistic target. You can do so by getting a copy of your credit reports, which sum up your repayment transactions and debit and credit management. If you’ve found any errors, make sure to dispute them early on.
Always pay on time. One of the simplest measures to present yourself as someone creditworthy is to pay bills on time. Apart from paying penalties, late payments will create a bad impression on your creditors. A recommended behavior is to make more frequent payments within a month so you won’t have to endure a one-time big payment. As payment history makes 35% of your score, it’s important to make sure you don’t have balances.
Inquire for a higher credit limit. When doing a credit repair, you should be mindful of your credit utilization (the percentage of your credit card spendings vs. Your credit limit). The recommended is 30% or less. One way to achieve this figure is by asking to raise your credit limits.
Avoid unnecessary credit card purchases. Speaking of keeping an optimal credit utilization rate — you can also accomplish it by making new credit card purchases, especially if they’re necessary or if they can be paid in cash. The higher your balance is, the higher your credit utilization will be. In turn, it will negatively affect your credit score.
Keep your credit cards open. Many people are tempted to close credit accounts in hopes of “erasing” the financial delinquency they’ve attained through them. However, be careful that even if accounts are already closed, the outstanding balance you have to pay will still be reflected on your report. Experts recommend keeping them open and pay to settle the balance strategically.
Communicate with your creditors. Like what any other credit education professional would recommend, it’s always clever for credit account owners to keep their communication line with their creditors open. For instance, if you’re caught up in a situation that might make it hard to pay on time, talk it out to them and let them help you come up with a more amenable payment policy.
English help from a credit professional. People who are looking into improving their credit score — and subsequently, their cash flow — often find themselves performing better when aided by a professional. As numbers can be overwhelming, and there might be circumstances that might push you to your financial limits, a financial expert can help you manage your debts more effectively and systematically.