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High food prices, debt repayment, monthly expenses…
Ugh!
All of this seems too much to deal with when your credit score health is not good at the same time.
However, there’s no such thing as “daunting” once you are on the right path to your financial goals.
And this is exactly what we have come up with – every single tip to help build back your dream life, one that is free of debt and has the best credit score ever.
Why Good Credit Health Matters?
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As the name suggests, credit health is all about how well your finances or financial life is working as an adult.
And this very factor is the reason why maintaining good credit health is so important, no matter at what stage of life you are standing.
Having a relatively not-so-good credit score can:
- Disturb your monthly financial plans
- Lower your chances of securing a good deal on loans
- Turn your retirement plans upside down
On the other hand, if you are someone who has been good at managing everything related to credit and financing, you must have been enjoying:
- Lower interest rates on mortgages, rent, and other installments
- A trustworthy “financial” reputation
- Higher credit limits
- Future stability
And a lot more perks.
Hence, you are able to make fewer financial mistakes.
Factors Impacting Your Credit Health
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Now that you are fully aware of the importance of good credit health, it’s time to have an in-depth look at the factors that significantly impact your credit scores.
This way, you will realize what might have been the real cause behind bad credit and how to do it right for your bright financial future and post-retirement life!
These factors include:
1. Repeated Late Payments
It’s just like the dose of medicine you didn’t take to treat your chronic flu. Yes, every missed payment puts a dent in your credit health in every way possible.
In fact, you might also have to deal with a higher interest rate and several penalties after multiple missed or late payments.
2. The Amount Of Money You Owe
The more debt you have to pay back, the more financially weak you are considered. This is why when there’s a ton of debt money piling up, know it is doing no good to your credit health.
Related Article: 10 Credit Relief Tips To Pay Down Debt
3. Credit Usage
Usually, experts suggest utilizing your credit below 30% for responsible credit card management. It lets the lenders know that you are not solely relying on the credit and are able to manage your money-related matters in a good way.
Also, the lower your credit utilization ratio, the better it will be for your credit health.
4. Your Credit History
Not having a credit history is like having no homework to show to your school teacher. A long credit history becomes your best bet when it comes to financial perks.
See: All The Tea Surrounding Credit History!
5. The Mix Of Credit Accounts
The more different types of credit accounts, along with strong credit history, you have, the more it confirms that you are a low-risk borrower.
In fact, credit mix is crucial when it comes to increasing your credit score and maintaining good credit health.
6. Frequent Credit Inquiries
A single hard inquiry in, let’s say, a year might not hurt your credit score. However, doing it more often than usual can surely make things worse for you and your financial matters.
For instance, you might want to apply for multiple credit cards to utilize for groceries, shopping, traveling, etc. But doing so in a short period will result in multiple inquiries that, in turn, will drag your credit score and health.
Improve Your Credit Health – 6 Tips From Experts
Below are some useful and quick tips that will surely help you improve your credit health in the long run.
Not only that, but these tips will also change the way you see and use your hard-earned money.
1. Fix Your Relationship With Money
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And by this, we simply mean that:
“make monetary education a mandatory part of your life.”
This will help you in a ton of ways. For example, you will know
- How to control your money and not spend it the wrong way.
- How a secured credit card is one of the best options to steadily build back your credit score.
- How to save for your early retirement and enjoy your youth simultaneously.
- How materialistic “luxury” is not what you always need to make the most out of each moment in your life.
And so on. What we’re trying to imply here is that before taking any major decision that can impact your financial future, you first need to fix how you deal with money in the present.
2. Point Out What Went Wrong
This is yet another important step to kickstart your journey to a healthy credit score.
Once you track your Equifax credit score through safer means, you can point out what went wrong in the first place. And then, you will avoid repeating the same mistake while fixing your monetary matters.
However, if you never check your report, you can’t find if there’s an error or whether or not the new budgeting rule is working in your favor.
3. Avoid “Buy Now, Pay Later” Services
As easy to go as it may seem in the first place, “buy now, pay later” can significantly damage your credit balance utilization.
The reason is that, psychologically, when you know that you don’t have to pay the full amount, for now, you spend a lot more than needed. Obviously, you don’t realize then, but you get a shocking bill to clear at the end of the month.
Related Article: Use 30-Day Rule To Avoid Overspending!
4. Never Miss A Payment
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You might think, of course, I know it already, but it is easier said than done. There goes a lot of thought processes, planning, and money-handling skills to achieve this specific “never miss a payment” goal.
We agree! But what if we tell you there’s an easy way to do that? Yes! All you have to do is follow these personal finance tips:
- First, make every payment a priority.
- Then, get hold of “wants” whenever the “need” arises.
- Lastly, avoid planning something that might cost you a huge amount of money you can’t afford to pay shortly.
Doing so will help you pay back your mandatory payments on time while also preparing yourself for hard times like high inflation, etc.
Because when you filter out your wants and needs, you automatically start to save for the future.
5. Build Your Credit File
This is the documentation of how well you have managed your finances in the past and intend to do the same in the future. It’s basically a credit profile that has the proof and record of how good you are with money.
A credit file lets lenders and other money providers pass on your loan requests as smoothly as possible.
6. Keep Your Taxation In Check
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This trick will not only give your credit a boost but also save you lost money.
However, this will only happen if you have been charged again for the same tax you have already paid. So, get back to your tax records and see if something needs fixation.
Thoroughly study the filing and get help from a professional if something seems tricky and hard to understand.
Related Article: 4 Steps You Should Take Now For An Easier Tax Filing!
Bottom Line
Good advice or information always feels like a pat on the back when you are unsure how to improve your credit score in the easiest way possible.
Keeping in line with that, hopefully, every single point listed above will turn out to be worth your time and attention for financial dealings.
