Having a good credit score will qualify you for the finer things in life. It will help you secure a loan for a home, lease an apartment, lower your car insurance rates and lower your interest rates. Poor credit often leads to loan rejections or a higher interest rate on loans because lenders see you as a higher risk. Good credit means that you won’t need to pay as much in interest over the long haul.
Pay Everything on Time
You can drop your credit score quickly with a single missed payment. Many times, paying 30 days past due can drop your score by as much as 100 points if you have an otherwise clean score. Those who struggle to remember the due dates of their credit cards should set up alerts and mark it on their calendars. Those who still struggle may find it beneficial to set up the payments automatically. This ensures that you can’t get behind.
However, even with autopay, you will still want to check in from time to time to have better control over your money and ensure that the processing happens smoothly. One of the most harmful pieces of advice that we have seen is that you need to carry a monthly balance to build your score up. In fact, they have proven that as a myth. The Consumer Financial Protection Bureau even tells people that paying off your credit cards in full every month is the best way to raise your score and maintain good credit.
How to Pay Off Debts
If you want to get serious about raising your credit score, you may find it advantageous to sell a life insurance policy through a life settlement. You do have things you should consider, but it proves a solid way of paying off your debts while giving you extra cash. Most life insurance policies will sell for lower than their value. That means a $250,000 policy could give you $50,000 on the lower end. That can be helpful when it comes to paying off your debts right away to raise your credit score. Without paying off your debts, your score will stay low.
Practice Good Spending Habits
Credit cards prove useful in a tight financial corner, but if you constantly max them out, your credit score will suffer for it. The people who do the best with credit cards will pay them off every month. You don’t buy more with a credit card than what you can afford. Don’t use them for frivolous things like buying fast-food or impulse purchases. The small things can quickly add up when you allow them to happen.
Good Credit Takes Time
You must understand how good credit won’t happen overnight even if you pay it off all at once. Credit scores exist to show lenders the risk of giving you money. It takes between three to six months of regular activity to calculate a credit score from the financial activity you have done. You won’t change that overnight. Six months can help you to get a better score, but it will take even longer to have an excellent credit score.