If your low on cash and are having a difficult time paying your bills or keeping food in your cabinet, then your likely not concerned about improving your credit score. While this may not be the first financial goal in your mind, improving your credit score can ultimately save you thousands of dollars over time. In fact, the latest studies have found those with higher credit scores generally experience greater financial freedom as their offered various savings and financial benefits those with lower or bad credit scores are unqualified to receive.
Whether your looking to establish your credit for the first time or rebuild your credit after years of neglect, there are several easy methods you can adopt to swiftly boost your credit score and attain the level of financial stability you crave.
Tip #1: Add an Extra Payment to Outstanding Debts
While this may seem impossible for those who are living pay check to pay check, adding an additional payment to your credit card or mortgage payments can significantly boost your credit score. Did you know that roughly a third of your overall credit score is determined based upon the utilization of your lines of credit? Known as your credit utilization rate, the more credit you utilize, the lower your credit score will be.
If you’re looking to quickly, and easily, boost your credit score, you should actively strive to keep your credit utilization rate between 10 and 30 percent. For example, if you have a $1,000 line of credit you should actively try to keep your outstanding balance between $100 and $300. Therefore, if you need to add an extra payment throughout the month to keep your debt in this magical range you’ll experience a significant boost to your credit score.
Tip #2: Never Miss a Payment
This is perhaps the easiest way to keep your credit score strong. However, when you’re working with a limited budget, it may be easy to forgo a credit card payment. When you’re struggling to make ends meet, the first thing you should do is contact your creditors. In many cases, you can lower your minimum payments. By doing so, you can keep your payment history clear without having to spend all your cash on bills.
While paying the minimum payments isn’t advisable for long-term, as you’ll ultimately end up paying significantly more with interest payments, making a minimum payment is far greater than missing a payment. Because you can make payments on your account at anytime throughout a month, scatter your payments throughout the month to keep your utilization ratio low and your interest payments at a minimum.