If you think reports are about as passe as report cards and a credit report is only for “people with money” to worry about, think again. Everyone, regardless of their financial situation, should know a ballpark estimate of their credit score and monitor their credit report at least yearly if not on a sporadic basis. The purpose of this is because good credit can help the application process go more smoothly on major purchases (like a home or a car) to standard utilities and even a cell phone. It can also effect job offers and grant you financing if you’re a budding entrepreneur. You can also be guaranteed lower interest payments and monthly payments for having good credit.
It’s all about starting good fiscal habits and maintaining them – and there’s some ideas below that can help you do that.
Your credit report includes:
- Personal information about yourself like where you’ve lived and your employment history
- Potentially negative items such as public records, bankruptcy and delinquent accounts with late payments.
- New credit requests
A breakdown of how you can improve your credit score:
So, a few of the most important things is payment history and amounts owed. One of the most important things you can do to improve your score is to pay your bills on time and don’t borrow anymore than you know you won’t eventually be able to pay down someday. If you borrow too much money, you can be denied the opportunity again and seriously find yourself trapped. Other tips that help you improve your credit score is how long you’ve had the account open – even if it’s with a card with pesky interest ratings. By keeping it open (but using it sporadically), you are developing trust and reliability that you have once utilized and paid back your credit and will be able to manage to do it again.
A Common Misconception
Are credit cards the only way to build credit? Not necessarily. You can use cash to improve your credit score as well. One way of doing this is by considering applying for a secured credit card through your bank. A secured banking card is granted for already maintaining good credit as it’s used to borrow against your personal savings, giving you access to funds while keeping your savings in tact. Interest rates are also lower than on an credit making it ideal for first time credit card users who need a credit card but don’t have a lot of major purchases to make. Make sure you make timely payments each month to set up a solid credit history.
Where to find your credit score
- You are allowed to request one free credit report with Equifax, Experian and Transunion.
- During the year, you can check a ballpark estimate of your credit score at free websites and mobile apps like Credit Karma. You can also use online tools to see how much money you owe and gain advice from the website and other community users.