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August 09, 2018

Tips to Manage Your Credit Score

When your credit scores with the three main reporting agencies is low, it's difficult to get a credit card or loans you may need for financing the essentials for everyday life including a home or a car. Repairing bad or poor credit rating takes time but there are things you can do to speed up the process. 

While you're working on rebuilding your scores, there are options for fast credit card approval. Along with tips on how to manage your credit score, we have information that could help you get approved for a credit card quickly. Now is the time to start and here is what you need to know to get started.

Make your payments on time

Set up a budget that lists your income and monthly expenses. Money may be tight, but it's important to pay each bill you owe on time or a little ahead of time if possible. Utility bills including power, water, telephone and loan payments for anything you've financed can be a benefit to your credit score when you establish a history of paying on time. If you have medical bills or other debt, these must be paid on time to avoid a negative credit reporting. Utility companies also report late payments. 

Set up reminders that let you know a week to 10 days in advance of a bill's due date. If you pay by check, allow enough time for the payment to arrive on or before the due date. In addition to establishing a good payment history, you'll avoid late charges and have more money left over. If you're certain that funds will be available, you can set up automatic payments that come directly from your bank account to avoid late payments.

Reduce the debt you owe

Reducing the amount of debt you owe will help improve your credit score. This might be difficult if you're on a tight budget, but in the long run, it can save you money in interest charges and it will boost your credit scores. Avoid using your credit cards if possible and pay extra on high interest accounts. Set up a payment plan in your budget that decreases the amount you owe on high interest accounts as quickly as you reasonably can, but be sure to make timely payments on your other accounts. Even a small amount of $10 over the amount of the payment due will make a difference.

Understand your FICO scores

Your FICO score contributes 35% to your overall credit rating. Any delinquent payments or accounts that have gone to collection show up here and these take time to fix. The only real remedy is to establish a better track record of on time payments and your score will slowly rise so it's vital you're on time for every payment. You can't erase the past but you can get current and stay current. Older negative reports will matter less with the passage of time and it won't keep you down forever, but you must be consistent over time. Collection accounts stay on your credit report for seven years, but a good payment history will make them count for less.

Credit counseling

If you're having trouble working with your current budget, contact your creditors to make arrangements for lower payments so you can be on time with affordable amounts. Most companies are willing to work with you. You can also see a reputable credit counseling agency for help if you need it. Credit counseling does not negatively affect your FICO scores.

Managing credit accounts

Keeping balances low and current on credit card or other revolving accounts will improve your scores over time. High outstanding debt can impact your credit score, particularly when your debt to income ratio is high. It's best to reduce your overall debt instead of moving it around with consolidation. Having said this, consolidation of debt can work in your favor if you can obtain an overall lower interest rate to reduce your debt more quickly. Always consider the bottom line of the total amount you owe before doing this. In some cases, having fewer open credit accounts with the same amount of debt can lower your scores, so maintain low balances on your open accounts instead of completely closing them.

Avoid opening several new accounts at once

Having too many open accounts can affect your credit score also. If you don't have a long credit history and you're trying to build one, develop a strategy of opening up one new account, then waiting, and opening up another a few months later. A flurry of inquiries into your credit score will knock your overall score down.

Do have credit cards

If you don't currently have any credit cards, opening an account can help build your credit score. Over time, open between 1 and 3 credit card accounts, but not all at once. Use them responsibly and keep your balances low. Make all payments on time. If your credit is poor and you don't qualify for a standard card, you should compare the costs and benefits of bad credit cards, but be careful because some of them are not worth owning. Only apply for the cards issued by reputable financial agencies and those with low annual fees, or better yet, no annual fees. Get the best interest rate possible.

Building credit or rebuilding bad credit scores is a process that takes time. By forming responsible and proactive spending and payment habits now, you can build your credit scores and improve them no matter how low they may be right now. Consistency and smart credit management pays off over time.

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