In our previous post, that you can read here, we discussed ways that you can improve your credit score.
Most of these methods involved a quick turn around on your personal financial habits. If you want to see an improvement on your credit, there isn’t an application to take the “I want a better credit score” test. Your credit information is a reflection of your fiscal habits.
It’s kind of like your report card. And, unfortunately, a lot of us are not making that minimum 3.0 GPA.
Now that you’ve learned a few ways to clean up your habits and improve your credit score, we have some other tips you can employ to make some long term improvements.
Here are some additional suggestions to boost your credit score over the long-term.
Easy Ways to Improve Your Credit Score
Continue to Pay Your Bills (and do it on time!)
We emphasized this point in our previous posts, but we’re going to revisit it again.
We’re doing this to stress the importance of paying your bills regularly and on time. There’s really no getting around this point. You have to pay your owed debts. While you may be able to negotiate a more manageable payment plan with your creditor, you’re still going to have to make regular payments.
Some of the ways that people accomplish making on-time payments are easy. For example, many creditors offer auto-pay options with their billing systems. This means that every month a specific amount withdraws from your bank account on a date that you determine.
This allows the payments to occur without any hiccup. It also involves minimal effort, something that we can appreciate.
For some, auto payments are not the most efficient route. Many American’s are living paycheck to paycheck, and therefore, they cannot guarantee that money will be in their account when the auto pay hits.
If that’s the case for you, then we advise creating a monthly bill schedule. At the beginning of the month, review your debts and the respective repayment due dates.
Then, cross-reference that information with your anticipated paydays, and that of your partner. Create a timeline of when you can pay your bills that aligns with when you receive your paycheck.
If you’re like us and need a reminder, write your monthly schedule on one of those enormous wall hanging calendars and perch it somewhere, you’ll see every day. This will help to remind you of the plan you’ve put in place and give you a push to make your payment.
However, you plan to do it – just make sure it gets done. Your credit will thank you!
Keep Your Card Balances Low
Once you’ve paid off a decent portion of your credit cards, commit to keeping the balance on each line of credit low. If you’ve achieved paying off your high balances, there is no worse feeling than watching the bill creep back up again.
The ideal level of debt to maintain is a 30% use of your available credit. This is a number that represents your use over a variety of different credit lines, not just with each individual card or line of credit you have.
Don’t allow this figure to be intimidating. This is the GOAL. And, remember that it does indicate that you are still using 30% of what is available to you. So, no, a zero balance on every card is not always the ideal situation.
In keeping with that thought process, approach paying off your debt as a marathon, and not a sprint. Your credit score will most definitely take a nose dive if you pay off every cent of debt you have in 48 hours. While that may seem like a reasonable approach, if you have the money to do it, it doesn’t actually work in your favor. Here’s why.
Creditors, and the determining factors for your credit score, want to see a responsible version of you. This means that they want to know you’re capable of making regular payments, in amounts that pay down your owed debts over some time.
It’s the whole idea of making a commitment and following through with the day-to-day actions to make it happen. It’s annoying, right? This whole adulting thing, and acting like one? We should have just stayed kids.
Choose Your Credit Lines Wisely
While it’s tempting to apply for your local department store’s credit card (10% off every purchase?!? Who can resist?), it’s best to make sure you’re monitoring the number of credit card lines you have open.
You do not need to own a credit card for every store within the tri-county area of your home. It’s not productive (who can keep track of that many bills?!?), and it’s not a good look for your credit score.
So, instead of trying to take advantage of every credit card perk available, consider looking for a limited number of cards that provide you with the specific perks that are especially beneficial to your lifestyle.
When you elect to open a line of credit, carefully review information about the repayment requirements and interest rates. It may be the most significant moment of your life when you open a Dicks Sporting Goods credit card. If you’re a sports or outdoor enthusiast, they have almost every piece of equipment your heart desires for your weekend hobbies.
However, if the interest rate on the card you’re carrying to Dick’s is astronomical, then you’re going to spend your years paying down your interest without making much of dent on your actual purchase balance.
This example is precisely why you want to be selective about your lines of credit and what you plan to use them for. While the perks of one card may be everything you could want and more, you’ll pay the ultimate price if you’re always fighting a never-ending battle of a high-interest rate.
Consider Using a Tradeline
If you’re feeling like you ready to do something big to improve your credit score (after you’ve done all of the steps we’ve previously mentioned), you may consider partnering with an organization like Coast Tradelines.
Coast Tradelines helps individuals with low credit build their credit by partnering them with individuals with high lines of credit and excellent credit repayment history. It sounds kind of strange but keep an open mind.
When you were younger, your parents (hopefully) introduced you to the world of credit by opening a joint bank account with you or co-signing your school loans. They may have even added you as an authorized user on one of their credit cards, permitting you to use it on an emergency basis only.
In doing this, they helped establish your credit. When the time came that you were eligible to venture into the world of credit on your own, you had a positive credit history.
Coast Tradelines affords individuals this same sort of opportunity to build their credit, as adults. The individual with the high line of credit, adds you as an authorized user on their card. While you will have no access to the card or the line of credit itself, adding your name as an authorized user will allow you to benefit from several factors.
First, it will increase your debt to credit ratio, enabling your score to improve from this alone. Second, the positive repayment history of the cardholder will transfer to your credit history, giving you another “leg-up” in the field of credit.
These positive behaviors will benefit you and improve your credit over time, helping you get closer to a credit score that reflects your positive choices in the world of debt.
However, it’s good to go into this scenario with the understanding that not every person who applies for this opportunity will receive approval. Much like the circumstances we discussed in the section above, creditors want to see a history of healthy financial behaviors.
While Coast Tradelines wants to assist individuals who have low credit, they’re not going to take on someone who presents as a ridiculous risk. Therefore, taking a significant amount of time to improve your credit score before you apply for these types of opportunities will increase your eligibility.
The Bottom Line
Improving your credit score isn’t a game of luck or chance. Much like digging a hole, to dig your way out, it will take time and effort. There isn’t a quick fix or magic method that will result in a better credit score overnight.
It’s essential to consider the mishaps that landed you in your current financial situation. Taking responsibility for your mistakes and making a concerted effort to rectify your choices is the best way to ensure you’re moving toward positive change with your fiscal health.
Additionally, sticking to your new way of living, much like sticking to a diet, is the only way you will see results.
Listen, we’re all humans, and we make mistakes.
So, don’t feel like you’re the only one in this boat. Just remember that to move forward, you’re the one who will have to do the paddling.
So, strap on that life vest and get to work! You’ve got a credit score to improve!
Michael launched Your Money Geek to make personal finance fun. He has worked in personal finance for over 20 years, helping families reduce taxes, increase their income, and save for retirement. Michael is passionate about personal finance, side hustles, and all things geeky.