Many people often turn to credit when times get tough. Unfortunately, just like your bank account, your credit score can suffer during uncertain economical times. First come the bills, then your income takes a hit and you take on more debt. If you are the type to spend more than your income, debt can only increase. There are time proven methods to avoid getting into debt and how to improve your credit score. Here are four ways to help you recover your score:
Get a line of credit – It may seem counter intuitive when your credit score is already hurting. The easiest way to establish credit is to use credit wisely. If you have either no score or it’s very low, a store credit card may be the way to go as banks often approve applicants who applied through an organization rather than on their own. Just be careful of higher than normal interest rates. Typical store cards run at 29% compared to 19% for regular credit cards.
Always pay your bills on time – Think of your credit cards as tools to help you build or improve your credit score, in addition to the convenience they provide. Don’t make any purchases you won’t be able to pay for at the end of the month. Late payments will negatively impact your credit score and cost a lot of money in interest charges. If you were unable to pay off the card in full on the due date, then at least pay the minimum amount. Paying on time is the number one indicator of a responsible buyer.
Don’t go over the limit on your credit card – Also, try to keep your balance as low as possible. One factor that influences credit score is utilization. This is the ratio of credit balance to credit limit. The higher the ratio, the more negatively it impacts your score.
Keep an eye on your credit report – Check your credit report for inaccuracies or signs of fraud. You can request a free copy of your report either by mail or online through a credit reporting agency. If you choose the mail route the report is free. However it doesn’t include your actual score, just the report itself. You can also obtain the online version of your report and your score, but a fee will be charged.
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