8 Simple Steps You Can Take Today To Improve Your Credit Score For Good

A low credit score can impact your life in various ways as it makes you seem untrustworthy with money. From making it hard to acquire loans with reasonable interest rates to raising the prices of your bills and determining whether your loan gets approved or not, a bad credit score can bring your life to a standstill. Not to mention, it could also keep you from acquiring your dream home and even influence your relationships. Fortunately, there are tons of tips available to help improve your poor credit score. Here are 8 ways to help you build a good credit score starting today.

1. Monitor your credit report

The first step to improving your credit score is to request a free copy of your credit report and check for any errors. In addition, you should regularly review your credit report for errors like unauthorized accounts and erroneous charges. In particular, ensure to check if there are any incorrect late payments and that the amounts owed for every of your credit account are correct. If you encounter any kind of erroneous charges, you should dispute them with a credit bureau. This is because even the smallest errors or discrepancies can end up hurting your credit score.

2. Make timely payments

Although it might seem like a no-brainer, one of the things that affect your score is your ability to make payments on time and every time. Unfortunately, even a payment that is just a couple of days late can negatively impact your credit history. While it is easy to lose track of your payments when you have to juggle between different bills and expenses, this should not be an excuse. One of the best ways to avoid missing payments is to put up automatic payment reminders for monthly bills such as electricity and rent. But for the case of bills that are not monthly like car insurance, you can set up reminders on your calendar. The longer you make payments on time after being late, the more your score should increase.

3. Keep your credit card balance low

If you have plenty of credit cards, the best thing you can do to improve your credit situation is to reduce the amount you owe. It is easier to reduce credit balances than cleaning up a late or missed payment history. As it turns out, your credit card balance determines 30% of your credit score. Therefore, by reducing what you owe, it can dramatically help to improve your score. However, you will first need to determine the exact amount you owe on each account and then create a payment plan. Basically, it is advisable to start paying off the smallest of your credit balances first before moving on to the next largest.

4. Avoid applying for new credit cards

A big mistake most people make is opening new credit cards that they don’t need at all just to increase their available credit. According to credit experts, this approach tends to backfire and can even lower your credit score. Therefore, the next time you get a tempting offer to open a new line of credit, think twice. It does not make sense to apply for a retail store card you will only use once or twice when you could use an existing card. However, in some cases, opening a new account can increase your credit limit especially if your accounts have low credit limits. So, if you are going to get a new credit account, only do so if it’s really necessary. However, make sure to read the fine print to determine what fees and interest rate are associated with the card.

5. Reduce your credit utilization rate

Another factor that determines your score is your credit utilization rate. Basically, it is the amount of credit you spend compared to what you have available. Therefore, the smaller the amount you spend, the better it is for your credit score. Generally, you should aim at using less than 30% of your available credit if you want to improve your rating. A low credit utilization ration indicates that you are able to manage credit well and lenders will likely be willing to lend you.

6. Increase your credit limit

Raising your credit limit helps reduce your credit utilization rate and improve your credit rating. Therefore, if you have not missed payments, it is recommended to request your credit card company to increase your credit limit. However, it might be tempting to spend more when you raise your credit limit so make sure not to adjust your spending habits. Just stick to using 30% or less of your credit available. With this tip, you should see results within a few months.

7. Don’t close unused credit accounts

The length of time you have had your credit card established with every creditor plays a key role in determining your score. It does not matter whether your account is inactive or not used, you will get rewarded for having a long-term and positive credit history with different creditors. Therefore, in case you have plenty of credit cards you no longer use, you can just put the accounts away rather than closing them. In addition, you should also never close an account with a balance as it can damage your score. Instead, you should leave it open and make an effort to pay off all the debts on time.

8. Negotiate with your creditors

Creditors might be the last people you would probably want to speak to but you should not view them as your enemies. Most creditors are usually willing to understand your financial situation if you openly communicate with them on time. Therefore, rather than defaulting on a loan or skipping various payments, you should just contact your creditor to negotiate your situation. Depending on your situation, some creditors may be willing to reduce monthly minimum payments, interest rates or allow you to skip some monthly payments until you can get back on your feet.

Conclusion

It is important to note that improving your credit score takes time and there is no absolute quick way to fix a low score. Therefore, patience and persistence is something you will need to have while repairing your credit. Just make sure you apply these tips consistently and over time you’ll witness your credit history improve.

The 5 Best Entry-Level Credit Cards You Can Get Today

Building up a good credit is a must-have for people from all walks of life, whether you’re a student, an adult or someone who hasn’t touched a credit card before. There’s only one problem, though- there are hundreds of credit cards you can apply for, each with their own pros and cons. Which one is the best for people who want to build up their credit history?

Here are the best entry-level credit cards you can get right now:

1. Discover It For Students

Discover It For Students is one of the top starter credit cards around, making it an excellent fit for college students and people who have bad credit. Perhaps the most remarkable feature of this credit card is that successful applicants won’t be penalized for having limited credit or no history of credit at all. What’s more, the rewards cash back program is similar to that of top-tier cards for seasoned cardholders.

Users get 5 percent cash back for categories that change per quarter, i.e., wholesale clubs, restaurants, gas, etc. New card members can get double cash back rewards once you reach the end of their 1st year of using the card, which means you can effectively get 2 percent cash back for all qualifying purchases that year. The amount of savings you can get is unmatched in terms of starter credit cards.

Discover cards and the Discover It For Students allow users free access to their FICO score, which can be very helpful if you’re trying to track your credit progress. Having access to FICO can also teach you how credit score works, such as how your credit goes down when you constantly reach your credit limit. Best of all, Discover It For Students has a $0 annual fee.

2. BankAmericard Cash Rewards For Students

BankAmericard Cash Rewards For Students works extremely well for individuals who want to have a card for buying basic necessities. Users can get 3 percent cash back for gas purchases and 2 percent cash back for groceries and wholesale clubs for up to $2,500 in combined charges per quarter. For everything else, you can get 1 percent cash back without limits. Also, the points earned using this card will never expire, which means you won’t be pressured to use your card or lose the reward points.

If you have a balance on other cards and you want to get a lower APR, the BankAmericard Cash Rewards card can help. Balance transfer offers are available during the first 12 months of opening the card account. Combined with the promotional 0% APR on the first year, you’ll have the chance to pay down the balance without worrying about interest fees. This works especially well if you’re on the path to building up a good credit history. The no annual fee feature and the $150 bonus is icing on the cake. Last but not the least, you get 10 percent bonus each time you redeem your points using a Bank of America savings or checking account.

3. Capital One Journey Student Rewards

Love traveling around the world? The Journey Student Rewards from Capital One is your best option.

First off, it’s unlike other credit cards that charge extra whenever you use them outside the U.S. The Journey Student Rewards credit card won’t charge you any fee when you use it on any foreign country, which is a perfect fit for students or individuals who travel or do work outside the United States.

The card also teaches users how to build up a good credit by providing an incentive for paying on time. Aside from the 1 percent cash back for all purchases, Capital One Journey Student Rewards ups the cash back percent to 1.25 when you pay on time. While there are better cash back programs on entry level cards, you’re primarily restricted to getting rewards on restaurants, groceries or travel. This card can be handy if you have a different spending habit.

4. Discover It Secured Card

Discover It Secured Card with No Annual Fee was specially designed to help people with no credit or low credit score get a chance to build their credit up to respectable levels again. It’s the perfect entry-level card for those who are looking to use a credit card for the first time.

Like most top cards in the market, the Discover It Secured Card offers cash back opportunities for its users. You can get 2 percent cash back for gas and restaurant purchases on a $1,000 limit per quarter. You also get 1 percent cash back for all other purchases.

Secured credit cards work in a way that applicants must place a security deposit as part of the requirements for opening an account. This collateral is the risk financial companies may take since they won’t be checking your credit score in the application process. Once granted, your credit line will be lower or equal to that of your security deposit. For the Discover It Secured Card, the minimum deposit needed is $200. This card has a zero annual fee and history is reported to all three major credit bureaus. Maintain a history of good payment and you’ll see your credit shoot up in no time.

5. BankAmericard Travel Rewards For Students

Got a limited credit history that you want to build on? The Travel Rewards credit card from BankAmericard is a good starting point. For starters, you get up to 1.5x cash back points per dollar spent anywhere you use the card. The travel aspect means you won’t ever get charged foreign transaction fees each time you use the card outside the U.S. You can take advantage of the 20,000 bonus if you spend at least $1,000 in purchases during the first 90 days, which translates to around $200.

The BankAmericard Travel Rewards For Students pairs up nicely when you have a deposit account from Bank of America. You can link them up and enjoy a 10 percent bonus for your cash back program, with up to 75 percent bonus depending on your Bank of America Preferred level of membership. If you qualify for the 75 percent bonus the BankAmericard Travel Rewards will probably be your favorite go-to credit card for many, many years.