Building better habits
Whether you’ve skipped credit cards altogether, as about 1 in every 3 young adults opts to do, or you’re ready to rebuild your credit history after years of late (or non) payments, now is a great time to get started. Consider these creditworthy habits that will help you get on the path to a high credit score — and lower interest rates on loans, as a result.
Fix your mistakes.
They might not even be your mistakes, per se, but inconsistencies can show up on your credit report as a result of errors or even identity theft. If you pull your credit report from annualcreditreport.com, you can find aberrations and get them reversed as soon as possible.
Make timely payments.
Paying off your bills on time each month is a surefire way to raise your credit score over time. If you miss a payment or are late, then your card issuer (or another entity that’s charging you, like a utility company) can inform the credit bureaus, which will ding your score.
Open accounts in your name.
If you’ve been relying on your parents or another family member, including a spouse, to put their name on all the accounts, then you’re doing yourself a disservice. Putting accounts in your name and maintaining them in good standing over time will reflect positively on your credit history and earn you a higher score.
Check account statements.
As with your credit report, monthly statements from your bank or credit card issuer are worth combing through carefully because an errant charge is often the first sign of identity theft. If you do notice a problem, be sure to report it to your financial institution right away so it can be addressed.
Stay under your credit limit.
One factor that influences your credit score is your credit utilization ratio — the percentage of your credit limit that you’re using at any given time. You can improve it by either increasing your credit line or using less credit. Either approach can help boost your score.
Be kind to yourself.
If you are starting over from a low point, like a bankruptcy filing, then being gentle with yourself and not expecting too much too fast can help prevent frustration. Recovering from a bankruptcy filing can take seven to 10 years, so you’ll have to be patient.
Save at the same time.
Even if you’re trying to pay off credit card or other forms of debt, it’s also a good idea to channel some money into a savings account for emergencies. That way, the next time an unexpected expense comes up, you can use your savings to pay for it instead of charging more to your credit card.
Review your budget.
To simultaneously pay off debt and put more money into savings, you’ll probably have to take a close look at your expenses and pick some to cut. Pay special attention to extras such as cable, personal care like salon visits and cellphone plans. You might be about to scale back, at least temporarily.
Keep your big dreams in mind.
If all this saving and scrimping is in service to a larger goal, such as buying a house or traveling to Europe, then remind yourself of that future reward often. Store a photo of your goal on your phone or print one out for your fridge. You might have to deny yourself a few luxuries in the short term, but you’re headed toward something much better.
Consolidate debt.
If you have multiple credit cards with balances, then you might want to consider applying for a 0 percent balance transfer card, so you can reduce your interest payments while working to pay off the debt. Sometimes, it’s cheaper to take out a personal loan and move the credit card debt to that loan instead.
Take advantage of rewards.
Once you’ve paid off your balances you can take advantage of some perks that come with using credit cards — namely, rewards. When you build up rewards points, you can use them to get cash back or items like airline tickets.
Stay on track.
Once you’ve put in all the effort to boost your credit score, you’ll want to make sure you don’t backslide into bad habits. Stick with that budget, avoid taking on any new debt and continue building up that savings account so you’re prepared for the next emergency.
More from U.S. News
7 Bad Investing Habits That Are Holding You Back
10 Money Tips for Family Caregivers
12 Habits to Help You Take Control of Your Credit originally appeared on usnews.com
