Some people are afraid of credit cards. Some people don’t know how to use it properly. There are lots of advantages and disadvantages of using a credit card. Actually, it depends on the person handling the card. Having a credit card can be an asset or a liability. An asset if you pay your bills on time. A liability if you don’t because of its high interest.
What are the 4 ways to improve your credit score?
1. Pay your bills on time – It has the greatest factor in determining your credit score. Lenders are concerned if you are going to pay them back on time. Having a good track record of payments in the past means you can be trusted in the future.
You can use an online reminder using a Google Calendar so that you will not miss any payments every month. In your computer, you can also use notepad for taking notes digitally. Or if you want the traditional way, post-it notes or notebooks are available in any bookstores.I use my Moleskin combined with a digital calender.
2. Keep your credit balances low – Some people may use their credit cards for everyday expenses like for doing groceries. This is really a bad move because maxing out your credit card is a big minus for your credit scores. It is recommended to keep a balance below 25% of your credit limit. For better understanding, if you have a credit limit of $1000, show a balance of $250 only. Obviously have a zero balance is even better.
3. Review your Credit Report on a Regular Basis – It is really important to review your credit report because any time there will be errors that will hurt your credit score. These errors might be any of these: inaccurate or outdated information, outstanding balances, late payments, unusual inquiries, charge-off and bankruptcies. The best thing to do is to file a claim to dispute and fix any errors with the reporting agency as soon as possible.
I remember there was a time they had an error with my contact number. It was just a single number though. Glad I was able to dispute fixed the error.
4. Don’t Close Old Lines of Credit Account – There is a fine balance between having access to too much credit and not enough. I use the percentage basis. At any given time, the total amount charged on your line of credit/credit card should not be more than 25%.
5. Don’t open multiple lines of credit cards – Some people may think that opening multiple lines of credit cards will increase their credit scores. This is not really true because it only affects for having a negative score. Even a 10% discount when you sign up offered by a credit card is not really worth it. Only take a new one if you only need it. Trust me, I used to try to sell this to people. The interest rates on these cards are ridiculous.