When it comes to your finances, there are always going to be things that you can do to improve your situation. Whether you know that you’re not doing too well at the moment, or you’ve just checked your credit file and you don’t like what you see, you can start to make a change. No matter what your financial habits have been in the past, you can definitely work to manage your finances better in the future, to improve your credit score.
One thing that you have to be aware of though is that this is very much a conscious decision. It’s not something that will happen on its own or overnight. The first step is always to want to make a change. When you make that decision, you’ve taken the first step to turning things around.
Your credit score can seem scary – and so can your file. But really, it’s just a project that you need to work on, much like anything else in life.
No matter what your current credit score may look like, whether you have debts or are struggling financially, you can turn things around. And no, this doesn’t have to be a process that feels impossible to do or that takes years and years. You just need to be able to know what to do to make a difference.
Even when you don’t have a credit history at all, you’ll find that you can use these tips to help you make a change and improve your score. So let’s take a look at what you need to do.
So You Want to Improve Your Credit Score?
Take A Look At Your Report
First of all, you’re going to want to make sure that you get a copy of your credit report. When you’ve taken a look at your free score, and you know that you need to improve it, it’s always useful to see what you’re dealing with.
So think about ordering your credit report and check it out. You’ll want to make sure that it’s correct and there’s nothing wrong included on there either. As sometimes, you may have financial connections or fraud that you need to get taken off of your report.
Get To Know Your Financial Habits
When you feel a little more clued up on your report, you’re then going to want to break down your financial habits. Because you may not even be aware of how you spend naturally or what you tend to do with your money. Maybe you’re far too frugal and your reluctance to spend means that you don’t exist financially. So when you start to take note of your habits, you’ll be at a great starting point.
Know What You Need To Do
From here, you’ll then want to know exactly what you need to do to improve your score. Your score is made up of the credit that you have, the amount, the age of your credit, and the checks that are made. But to ensure that you start improving the score, reducing your debts, making payments on time, and building up reliable credit can help you.
Track Your Spending
You’ve got a better sense of your financial habits already, but now you need to start tracking your spending. When you do this, you can often be shocked at where your money goes and how much you tend to spend. By starting to track everything, you can then begin to make better financial decisions.
Reduce Your Expenditure
When you have got a little more familiar with how you spend, you’ll find that reducing your expenditure can help – particularly if it’s getting you into debt. Take a look at this advice from The Simple Dollar to see if it’s going to help you.
When you can bring down your basic costs, you’ll often have more money to put aside for things that you need.
Make Debt Payments
From here, you’ll then want to make a bit more of a conscious effort to pay off your debts. Your credit utilization really counts towards your credit score. So if you’ve maxed out all of your cards, it’s going to reflect poorly on your report. But when you can make payments and start to reduce the ratio, you’ll see your score improve.
Keep Your Financial Habits Healthy
One thing that’s going to really help you to make a difference within the next year is to make sure that your financial habits are as healthy as they possibly can be.
This means making sure that you’re living within your means, that you’re spending consciously, and aiming to keep some money aside. When you’re doing well and feeling comfortable financially, it’s going to help you to improve your score.
Be Smart With Cards
When it comes to the credit cards that you have, you’ll want to make sure that you’re spending smartly on them. It’s tempting to take in different offers, which Alex Miller from Upgraded Points discusses, but you need to make sure that you’re really benefiting. Don’t just be suckered in by what you think is a good offer when really you’ll get stung in the long run.
Make All Payments On Time
When you have bills to pay, loan or mortgage repayments, or credit card minimum amounts to meet, always always make sure that you make them. When you miss a payment, it can affect your credit score and show up as a default on your report.
If it’s an accident, you may be able to avoid this. But multiple late payments will severely harm your score so be sure to make your payments on time.
Keep Your Accounts Open
After you’ve paid your accounts off, it can be tempting to close them. But don’t rush into this. It’s often not a good idea to close a bunch of old accounts and then open new ones. Because the age of your credit history affects your score.
The older the accounts are, the more reliable you show to be. So keep your accounts open and healthy, as this will help your score.