Do you have questions about your credit score? You’re not the only mom who’s wondering how to improve her FICO score and looking for more information. In a recent survey conducted by U.S. News & World Report, 60 percent of surveyed Americans were under-informed about their credit scores.
Here are eight things you can do to improve your credit. Follow our guide to get started today.
1. Pay Your Bills on Time
The easiest way to improve your credit score is to pay all your bills on time. Even if you’re hitting the minimum amount, you should pay that month than fall behind. Thirty-five percent of your FICO score is decided when you pay your bills. Your payment history is one of the most critical factors in determining your credit score, so you must start hitting your scheduled payments.
2. Automate Your Payments
An easy way to never fall behind on your bills is to automate your payments. You can easily set up online payments directly with your bank. Your bank will deduct a preapproved amount from your account and transfer it to the company you need to pay. Additionally, you can set up automatic payments with a biller. However, if you choose to automate your expenses, you’ll want to watch your accounts, so you don’t accidentally overdraft money.
3. Check Your Credit
It’s wise to be aware of your credit score and check it regularly so you can stay updated. All credit checks you request are called soft inquiries and do not affect your credit score, nor do they cost any money. You can request a soft inquiry with Experian, Equifax or TransUnion every 12 months.
Hard inquiries occur when you apply for a new line of credit, and a lender inspects your score. These checks can potentially impact your credit score. Before you apply for a new card or line of credit, it’s wise to check your credit to ensure your score is good.
4. Limit Your Credit Cards Applications
While you may be tempted to open new credit cards to get the benefits–open a card today and save 25 percent off your entire purchase at Carter’s–it’s wise to pace yourself when starting new accounts. According to FICO research, people who open multiple tabs in short periods are more likely to be credit risks.
To improve your FICO score, be intentional and intelligent about when you open a new credit card-as it impacts ten percent of your credit score. As you’re looking to build your credit, you should space opening credit cards every six to 12 months. After your score stabilizes, you can consider applying for a card every few months.
5. Keep Credit Balances Low
Best practice calls for keeping your credit balances low–aim for using under ten percent of your available credit. Regularly using a higher ratio or the entire credit limit can suggest risky credit behavior. If you regularly max out your cards, the behavior can negatively affect your credit score.
To help you get out of the habit of maxing out your credit card, try to view your credit card like a debit card. Rather than wait until the end of the month to pay off your credit card purchases, pay them off as you swipe. This will get you in the habit of keeping your credit balances low.
6. Request Becoming an Authorized User
Improving your credit score can take a long time. If you’re young or your score is in particularly bad shape, consider asking a parent or family member with good credit to add you as an authorized user to their credit card. This practice allows you to inherit the good financial behavior of your family members. Credit Sesame reported that people who originally had bad credit scores of 550 saw improvements of 10% to their scores after just a month of becoming authorized users.
7. Maintain a Variety of Cards
A great way to help improve your credit score is to show you can manage multiple credit cards. Consider paying off an auto loan on the first card, your mortgage on the second and groceries and diapers on the third. Having a good mix of credit cards and managing the payments factors into your FICO score by ten percent.
When applying for new credit cards, consider the following questions:
- Why do I need this card, or how will I use it?
- Does this card offer rewards? How is the program structured?
- Are there annual fees?
- What fraud protection does the card offer?
- What’s the standard APR for balance transfers and purchases?
8. Pay Off Debt With a Loan
If you’re looking to pay off credit card debt, consider securing a debt consolidation loan from a bank rather than using one credit card to pay off another. Not only will you help your FICO score by paying off your credit card debt. But you’ll likely find the personal loan interest rate is lower than the credit card interest rates.
Before you approach a bank or credit union, run the numbers and see if you’ll have enough to pay off your loan. The bank will want you to have fair credit–between 580 and 669. Check your credit report before your contact your potential lender. Depending on your credit, you may need a co-signer to get your debt consolidation loan. Consider signing with a partner or family member who has better credit.
Consider These Factors for Your Credit
As you seek to improve your credit score, remember that it’s possible to stabilize your FICO score. Start by automizing your bills, routinely checking your credit, limiting your applications, keeping your balance low, maintaining a variety of cards, becoming an authorized user and paying off debt.
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