5 Things You Aren’t Doing to Achieve a Perfect Credit Score

by Justin Weinger on September 16, 2014

We all know that credit is important, but would you believe me if I told you that credit might just be the difference between living paycheck to paycheck, or buying that new boat you’ve always wanted? It’s true, and as more and more of us struggle to get by, it’s becoming quite apparent that great credit means more than most of us give it credit for. 

Just a 1% increase in your mortgage rate brings the price of the average $250,000 home up nearly $500 per month? While that’s quite expensive, I want you to factor in the other things you’re using credit for, and just what it’s costing you. Car loans, the RV in the driveway, a second mortgage, or credit cards can all be costing you tens of thousands of dollars each year, and certainly can make the difference between getting by, and living well.

Credit is important, but most of us aren’t educated on just how important it is, nor do we know what to do when we start to get a blemish here and there on our credit report. Knowing how to improve your credit, or maintain your current score is key to saving, and the more you know about your score, the better off you’ll be in the long run.

We’ve created a list of five things that the average person could be doing to improve their credit score. Remember, a few percentage points of APR can go a long way, and knowing how to best utilize your credit – or fix existing blemishes – saves you a hefty sum of change each year.

Checking Your Credit Report

You’ve been told since you got your first car loan that you should be checking your credit report at least annually to stay on top of where you are currently, as well as knowing what blemishes – if any – you need to fix. In addition, errors on credit reports aren’t uncommon. In fact, MSNBC reports that approximately 1 in ever 5 people have an error on their credit report currently, and that number is actually growing as more and more records are kept digitally. 

You can check your credit report for free, once each year. There are several options online, or you can also request the report from the three main credit bureaus: Equifax, Transunion and Experian, directly through the mail. 

Paying Everything Off Each Month

Most experts agree that keeping your credit card debt under 30-percent is the best way to go, but nothing beats paying off the debt in full each month. This simple practice can lead to rapid limit increases by your creditors, which goes even further toward bettering your overall score (more on that later). In addition, debt that is paid each month typically keeps you from incurring any interest, which is often quite high on most credit cards and even higher on retail cards such as Sears or JC Penny.

Not Asking For Limit Increases

For some, they just don’t trust themselves with large credit limits, and that is semi-understandable. For the rest of us, I’d recommend asking for a credit limit increase as often as your card allows it. The higher the limit the cards allow you to carry, the more it positively impacts your credit score. Most scores factor in the total amount of credit being offered as well as how much of that you’re actually using. This step alone can show huge gains in your overall scores from the three main bureaus.

Taking On Too Much Debt

If you haven’t mastered the art of frugal spending, now is the time. Educate yourself to the power of credit, and be aware of just what a pickle your bad spending habits are getting you into. The easiest way to start is by budgeting your expenses and then working from there. Picking up a book or two from the likes of Suze Orman or Dave Ramsey would probably beneficial here as well.

Not Repairing Your Bad Credit

Credit repair services are typically the fastest and most efficient way to repair your credit. For me, I always recommend the services as they’re just far better at getting negative marks removed. These businesses have been doing this for years, and know just the right type of language when trying to negotiate settlements, or have negative marks outright removed from your credit. Sometimes it’s best to trust the experts.

Taking just a few minutes a day to educate yourself on credit repair, as well as steps you can take to boost a good score to a great score will go a long way in saving you money each year. Take my advice and get out there and make it a mission to improve your credit score… your bank account will thank you.

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