Having good credit can be a great gateway to financial freedom but it is not always easy to get and can be even harder to maintain. In order to understand why credit is important and what it can do for you, you must first understand what credit is and how it can affect your life. According to Experian.com “Credit is borrowed money that you can use to purchase goods and services when you need them.” Bad financial choices and unfortunate circumstances such layoffs and medical issues can cause an otherwise creditworthy person to quickly lose their ability to maintain their bills resulting in declining credit score. A low credit score can prevent you from getting the house or car that you want. It may also prevent you from receiving a better deal on items that you must make payments on. If you have found yourself in this type of predicament and are trying to rebound here are a few simple ways to increase your credit score and maintain your valuable credit reputation.
Pay your bills on time
Whether it’s rent, car payment, utilities, etc., bills are fact of life. If you find it hard to keep your bills and their due dates in order pay them on a credit card so you only have to pay one monthly bill. Take some time to research credit cards with low interest rates. Many companies offer 0% introductory interest rates for varying periods ranging from six months to one year which is a great way to take advantage of the flexibility and purchasing power credit cards provide. When your charges are paid within a predefined period of time charges do not accrue interest. One great benefit to credit cards is that you have the option of creating a bill pay. With this bill pay, you can put all of your recurring bills on one card, and make only one payment monthly with your bank account. This may seem like a redundant task, but remember it is for the purpose of building or rebuilding your credit.
Pay your bills consistently
Another way to increase your credit score is being a consistent bill payer. Much of your credit worthiness is based not only on that fact that you pay your bills but that you do so faithfully. One benefit of making this a habit is a creditors willingness to reward your reliability through reduced interest rates, increased credit limits and missed payment forgiveness programs. If you have a credit card in which you have been paying on-time every month and extended period of time, often a year or more, you can request that the lender erase one or more past delinquencies should you run into a period of inability to make your payments. Keep in mind that even the smallest thing helps when you are trying to maintain or build your credit score.
Consolidating your debt is a great way to increase your credit score. Similar to the idea of paying or monthly bills on a credit card you’ll want to try to find one card that not only holds all of your debt, but also has a 0% interest rate. Don’t be fooled, a 0% interest rate doesn’t last forever so you have about a year or less on most cards to eliminate as much debt as possible. Keep in mind that there takes some coordination when transferring your balances to a credit card so that you won’t get charged an extra interest fee. Also, companies may charge you a transfer fee which ultimate is worth doing if you’re really serious about eliminating your debt.
If you have bad credit, good credit, or no credit, these are great ways to get you started toward a great credit score and financial autonomy. Good luck.