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Four Ways You Can Improve Your Credit Score

Four Ways You Can Improve Your Credit Score

The truth is repairing credit overnight is unlikely, even with a certified credit consultant. However, there are a few ways to gradually fix your credit without a credit repair consultant. Here are four ways you can improve your credit score. 

  1. Understand Your Credit Statement

When you open up your credit statements, you will most likely see terms like “minimum payment” and “statement balance.” Most of us will stop reading the rest of the credit statement after seeing the minimum payment, and this is why statement balances increase the next month. 

The minimum payment means the smallest amount of money that you have to pay every month to keep your account in good standing. In contrast, the statement balance is the total amount on your account for that billing cycle. Most people pay the minimum payment and call it a day. The problem with only paying the minimum amount is the balance being carried over into the next month. In addition, only paying the minimum will cause an increase in interest charges on the next bill cycle. Thus, there are consequences to only paying the minimum. 

To avoid balances carried over and increased interest charges, it is beneficial to consecutively pay statement balances in full because it will fix your credit over time. With that said, paying the minimum is a good alternative to avoid late or missed payment fees, but continuously paying only the minimum will affect your credit score in the short run. If you’re ever in a situation where you can only pay the minimum amount, try to pay a little bit more than the minimum to exhibit financial responsibility on your credit report. However, the best way to repairing credit is to pay statement balances in full!  

 2. Pay All Outstanding Statements

Credit scores rely on 35% of payment history, which means paying credit card bills on time will likely fix credit scores by 35%. On the other hand, missed or late payments can significantly harm a credit score! That is why it is essential to make payments on time because any late or missed payment will be instantly reflected on the credit report, which will cause bad credit. Along with causing poor credit, late or missed payments will cause additional charges like late or interest fees onto the next billing cycle, which will result in further debt. For these reasons, the best way to start repairing credit is to make payments on time to avoid a poor credit report and additional billing cycle fees.   

While making payments on time is one way to fix credit, another alternative is to make payment arrangements for instalment payments with the affiliated credit company to receive extra time to make payments. You must make payment arrangements before or on the day of the payment to help fix credit scores.

3. Pay All Outstanding Collections

If you already have an accumulation of missed or late payments, the only path to repairing credit is by paying all outstanding collection items on your credit report. Outstanding payments on credit reports indicate poor financial responsibility, which affects your reliability to receive new credit lines. Paying all unpaid bills is the best way to actively fix your credit to remove those items from your credit report. If you have an outstanding payment that you cannot instantly pay in full, call the affiliated credit company to arrange payment plans to reduce the total amount into instalment payments. 

Also, be cautious of retail companies offering credit cards with 0% interest for 12 months on your first purchase item. In some cases, if you go 12 months without paying for the initial item, you will receive an accumulated interest charge for the 12 months that you did not pay. Thus, make sure to pay outstanding collections to avoid collecting debt in the long run.

4. Use A Budget to Manage Your Finances 

One method to repairing credit is by creating a practical budget plan. A monthly budget plan will help you manage your finances by writing out your fixed and variable expenses and monthly income. Identify how much money you earn in one month. This number is your monthly income. Now list out all the fixed expenses in one category and your variable expenses in another. Fixed expenses are necessary recurring payments like rent and credit card bills. Whereas variable expenses are unpredictable expenses like a night out with friends or family. With your two categories, total your expenses and subtract the value from your monthly income. Remember to prioritize your fixed expenses! After subtracting both expenses from your monthly income, recognize the remaining value as money you get to save. If the remaining value is negative, change your variable expenses to ensure you prioritize the fixed expenses while keeping enough money left over to save. Overall, by writing down your monthly budget, you can visually see how much money you spend and save.

The four tips listed above are actionable practices that you can start doing today to help gradually fix your credit score. However, to achieve the credit score you truly want, our team of experienced credit repair consultants at Credit 360 can take you a step further than the four tips we listed above. We can make repairing credit as easy as one, two, three through our credit consulting services. One, we review your credit history with you. Two, we identify the negatively effective statements. Three, we work actively to remove the impacting notices. At Credit 360, we strive to provide the best services to fix credit while creating the life you deserve.

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