Whether you like it or not, credit is an integral part of the modern economy, real estate market, and banking status-quo. If you have bad credit, you will feel it in your financial life. You won’t be able to take out loans, buy a home with a mortgage, lease a car, and more. Or, if you don’t have any credit at all you could have money but have less financial opportunities. Whoever you are and whatever your situation is, here are five tips to improve your credit and build a good score.
Change Your Mindset
The most important thing you do is change your mindset surrounding debt. This means that you should get into the habit of making significant payments instead of putting it off because it causes you emotional turmoil. Don’t allow stress, anxiety, depression, and other emotional issues to prolong your debt. You have to engage with it to pay the money back to the people you owe it to. You have to work hard to overcome debt or you will have it forever. Break the cycle by getting rid of any debt you have and building your credit score by always paying off whatever you borrow immediately.
Borrow, But Pay it Back
Of course, the most important thing you can do is pay the money back that you owe. If you put money on your credit card or borrow from a lender, it is absolutely pivotal to return the money as soon as possible. If you don’t, the interest will pile up and increase continuously. You’ll have a difficult time paying the money back if you wait. That’s why it’s the best move to never make the minimum payments and get rid of any debt you owe as soon as possible.
You can create a payment arrangement based on your current income and expenses, sell things you don’t need and use the cash to pay off debts, or apply for emergency loans for bad credit for smaller debts. Not only will you be less stressed about the money you owe, but your credit score will also increase.
Credit Builder Card
One thing you can do to improve your credit score is to apply for a credit builder card. These credit cards provide a great way for you to build your score in a favorable interest environment. Like a regular credit, you put a purchase on it and you pay back the money with interest that grows over time. But these builder cards provide lower rates and become a great tool for building your credit. Whether you’re putting a lot of purchases on it or are simply using it for larger expenses or emergencies, a credit builder card is a good way to get started.
Look For Errors, But Not Often
You should keep in mind that the three major credit bureaus are made up of humans and humans make mistakes. That’s why you should take a look at your credit lines every so often. You will be able to see if there is an error saying you owe someone money you don’t owe or have already paid it back. Keep in mind that every time you look at your credit, it negatively affects your score. So when you’re taking a look at your lines for things you want to correct, do it quickly and don’t constantly check your credit score.
Mortgage a Property
Finally, if you have the money and can get approved, mortgaging a property is a great way to build your credit. While you want to improve your credit before you apply for a mortgage, it is also a good way to increase your score even more. Each month when you make your payment you will be putting money towards owning your home while building your credit. It’s a two-birds-with-one-stone situation. If you have enough money to start paying mortgage payments, you will be improving your financial situation by investing in a property and increasing your credit score.
There are other ways to build credit, but the five above are a great place to start. When you need to increase your credit score, it’s important to pay back whatever debt you owe. But if you don’t owe money to anyone and need to build credit, you’ll have to start borrowing and paying back the money immediately. As you do, over time your score will increase and you will have more financial opportunities that will benefit you and your whole family. It’s time to build credit!