Getting educated about your finances can be a daunting process, but once you’ve started to pay attention to you money and make an effort to figure out how it works, the expectation is that you’ll start to see results. Most of the time, this expectation is met; you start throwing more money at your debt, the total goes down. You start putting more money into savings, your balance goes up. Simple, right?
Well, when it comes to your credit score, the picture is a little more complicated. Many people who make plans to improve their credit scores become frustrated that their efforts don’t seem to be paying off. And this is understandable; boosting your credit score is tough, so failing to see any fruits come from your labor can be maddening.
Luckily, though, there are a few common reasons your credit score won’t budge and some relatively easy fixes you can use to get your digits moving in the right direction. Check out the information below for more details, and pretty soon your credit score will be riding high.
Reason #1: You’re paying off other loans ahead of your credit card
Reducing your debts is really important when it comes to boosting your credit score, so if you’re trying to pay off your obligations, you’re making the right move. However, for most people, your credit card is the most important debt to repay as fast as possible, at least as far as your credit score is concerned. This is because a maxed out card is dinging your score in two ways – overall debt level and credit utilization.
Solution: Stop making extra payments on your other debts and shift your attention to getting your plastic paid off, pronto. The impact on your credit score will be huge!
Reason #2: You’re still paying bills late
In an effort to get debts paid off, some of us put off paying other bills to make the debt die faster. While it’s gratifying to watch debt dissipate, if you’re paying bills late to do so you’re not taking the long view. The largest portion of your credit score – 35% - is reflected in your history with paying bills on time.
Solution: No matter how hard it might be, make it a priority to get your bills paid by their due dates. Even if your debt isn’t paid off as quickly, the long-term effect on your credit score will be worthwhile.
Reason #3: You just got started with credit
Fifteen percent of your credit score is determined by the amount of time you’ve been using credit, so if you’ve just gotten your first loan or credit card, your score might be looking a little shabby.
Solution: Be patient and keep your finances in order – pay your bills on time and in full, borrow responsibly, and avoid debt. Over time, your credit score will rise to reflect your good habits!
Keeping your credit score in tip-top shape is easier if you know these simple tips, so make sure they’re a part of your financial plan!