Debt is quickly crushing people’s dreams and hopes of attaining financial freedom. Consequently, more American homes are getting into bad standing with creditors and the subsequent credit bureaus that keep tabs on payables.
Studies show that over 11% of Americans suffer from the lowest credit scores, as low as 550 in many cases. For perspective, 630 is often a lousy score already. Credit Spike and Dillon Kivo offer some actionable steps to improve credit history. Here are seven ways to improve your credit score and get ahead when it comes to debt.
Understand what goes into a good credit report
“Knowledge is power, so the first step is to know what it takes to consist of an excellent report,” shares Credit Spike. There are generally five factors to a credit report—your payment history, level of debt, credit age, the mix of credit, and recent credit. Understanding where you are and what is considered good levels will help you with your journey to better credit history.
Pay your dues on time
One of the most significant contributors to bad credit history is late payments, and that goes beyond just your credit cards and loans. You should also pay all forms of dues, like utilities and cell phone charges, on time as well. Keep a record of due dates and try to find ways to pay online, so you never miss a due.
Keep balances to a minimum
“Higher credit balances are often harder to maintain and pay off, so keep your balances to a minimum when possible,” adds Dillon. “A good balance to sustain is up to 30 percent of your overall credit limit.” So that means that if you have a $1,000 credit limit, for instance, never borrow more than $300 at any given time.
Don’t close old credit cards
Usually, one would think that closing a credit card is a good thing, but it’s not always good for your credit score. When you close your card, your card issuer updates Experian, Equifax, and TransUnion. After ten years, those bureaus will remove those closed account histories and cause your credit score to drop.
Stay on top of your debts
People get loans all the time for education, cars, houses, or businesses. Those loans have an impact on your level of debt. Too much of it can cost you points on your credit score. “The lower your debt and the more religiously you pay them off, the better your credit score will become,” explains Credit Spike.
Limit new credit as much as possible
The urge to borrow more money will always be there as it often promises quick results, but it can hurt one’s financial health in the long term. Try to limit new credit as much as possible, especially when struggling to stay on top of current credit. Picking up a new credit account will automatically lower your average credit age, reflecting poorly on a credit score.
Live within your means
Lastly, always try to live within your means and avoid overspending on luxuries. When your cash flow isn’t enough to support your monthly costs, try to find other sources of income or consider living in cheaper areas or cities. The less you spend, the less credit you will have to access to maintain a particular lifestyle.
If you’re looking to improve your credit score and grow in the area of financial freedom, reach out to Credit Spike and Dillon Kivo at _______________ about their company’s credit repair services.