Your credit score may just be a three-digit number, but it is vital to keep that number as high as possible. In simple terms, your credit score is a number (ranging from about 300 to 850) that evaluates your ability to repay loans. The higher your score, the easier it will be to qualify for credit cards and loans.
Unfortunately, due to unfortunate financial decisions, inconsistent income, unemployment, or high existing loans, your credit score might not be where you would like it. It may seem like your score will never get better. But there is hope!
Many of our clients ask us: “How can I repair my credit?” And we have a few financial strategies you can employ in answer to that question:
Keep Up With Your Bills
When you are applying for a loan, one of the first thing lenders will check is whether or not you reliably pay your bills. Fortunately, there are ways to help you stay organized!
If your bills have AutoPay options, then all you have to do is hold or transfer enough money in your checking account monthly. With this option, you are virtually guaranteed to pay on-time! Setting up a calendar with reminders is also a great way to know when bills are due regardless of AutoPay.
Avoid Opening or Closing Credit Cards
It is true that, in some situations, getting a new credit card and using it periodically can help your credit score. However, in most cases, it won’t have much of a positive effect. The hard inquiries on your credit score matched with the temptation to overspend can be more detrimental than helpful. Try to manage what you have before adding more to the list.
Make Regular Loan Payments & Keep Credit Card Balances Low
If a bank, credit union, or private loan provider is to approve your application, they need proof that you can repay the loans you already have, including your credit card balance. In many credit score calculations, the credit utilization ratio is crucial — this number is calculated by dividing your accumulated credit card balances by your total credit limit. Typically, moneylenders prefer ratios of 30% or less because it shows them that you have not maxed out your credit cards and understand how to manage your credit correctly.
If you take this advice to heart and work towards regular, on-time payments and avoid financial decisions which incur hard inquiries and promote overspending, your credit score will incrementally improve. If you are still struggling with your credit score or asking yourself, “How do I get out of debt in Philadelphia?”, contact Quality Credit Repair today!