There are a lot of helpful financial tips you will come across as you try and focus on your finances this year even when it comes to your credit score. A lot of different people will tell you the best way to reach your goals. Finance professionals would start to dish out professional pieces of money advice about how ordinary consumers can start managing their finances.
The truth to all these is that each one of them might work to your advantage and help you reach your targets for the year. Although they can also be detrimental to your goal and actually push you further away from where you want to be at the end of the year. These money tips being shared within the industry may or may not help you and it all depends on your current financial situation.
These helpful financial tips you read and hear from different people are all based on their past experiences and current situation. With that mind, remember that your financial challenges, the factors that lead to it, as well as current money situation are all different from those dishing out pieces of financial advice on how to deal with your credit score.
It basically means that when choosing which advice to follow, you have to consider your personal situation first and how similar it is to the one giving out the advice. Your credit score is a personal representation of your financial character. Lender and creditors use this to assess the risk they are undertaking in giving out a loan or extending credit to consumers. When it comes to your credit score, there are a few constant factors to look into which you will come across quite often.
Get a copy of your credit report
One of the most helpful financial tips you can look into is to make sure that you are on top of your credit report on a regular basis. You might start to think that this is just a waste of time and especially money since you have to pay to get a copy of your report. However, you need to think of this as not wasting time but investing time in making sure that your finances are in order.
It is also not a waste of money because although you can pay for a copy, you can also get them free of charge. The Fair Credit Reporting Act or FCRA ensures that consumers get to receive a free copy of their credit report. The FCRA requires credit reporting bureaus such as Experian Equifax, and TransUnion to provide a free copy of your credit report once every 12-month period.
If you look at this scenario, this means that you can actually monitor your credit report every four months. Get a free copy of your report from one bureau every four months and you have an idea of how your score will look like. This is because your credit report is the basis of how your score will be computed by the agencies.
Identify mistakes if there are any
One of the helpful financial tips you can look into is making sure that once you have a copy of your credit report, you start scrutinizing it and looking for mistakes. This is because your reports may still contain errors that could contribute to a low credit score. Fixing these mistakes could help you improve your score and set your records straight.
One thing you have to be wary about is when the mistakes in your report have something to do with your personal information. When it is about reporting missed payments you have made or asking that a paid-off loan be taken out, that is fine. However, choosing to correct your name and other information might do more damage.
For one, your credit activity could already be connected to this information and correcting them might undo all your hard work. This is a tricky situation and one that you need to work closely with your lenders, creditors, and even the credit reporting bureau. At the end of the day, the important thing is that you take due diligence in making sure that you go over your credit report and look for areas you can improve on.
Create a repayment plan
Once you have an idea of what your credit score is based on your credit report, you need to make sure that you put together a repayment plan for your debt obligations. This is one of the most helpful financial tips you can ever look into because it will be a positive development for your score. The more serious you are in paying down debt, the better it can reflect on your score.
The first thing you have to do is to audit and list down all the debt obligations you have at present. Make the list as comprehensive as possible to help you cover all areas. It would be a good idea to include details about your lender or creditor including name and all contact information they have. Of course, it is important to list down the amount you as well as the interest rate and even your payment due date.
Now that you have an idea of what your payments are, you are in a better position to create a repayment plan. It can either be prioritizing the high-interest items first or those with small one balances. Some experts refer to this as a snowball or avalanche method of payment. You can also look into debt consolidation to help you combine and focus on a single monthly payment.
Stick to your plan
When you start looking at helpful financial tips and create a repayment plan, you need to follow through with that plan. Many times people would pour in a lot of effort into creating a plan to improve their credit score only to fall short on the actual execution. It does not matter how effective the plan is because if there is no action, it is good as dead.
When you have a plan, condition your mind how you will follow that plan. If it helps, use technology to make sure that payments are made. You can make automatic payments provided the amount does not change month to month. Rather than waiting for the actual statements to be delivered to your home, sign up for paperless billing.
This way, you not only help save the environment, but you also receive them in a timely manner. When that happens, you can make payments early or at the very least, send them on time. You can also enroll your bills online making payment easy and hassle-free. Gone are the days where you have to mail a check or line up at the bank just to make a payment.
Limit unnecessary spending
When you start to look at helpful financial tips to improve your score, keeping a watchful eye on your spending should be a priority as well. It is not enough that you fix errors in your credit report and make on-time payments for obligations you already have. You also have to make sure that you do not add on to your financial stress. This is important as CNBC shares how one-third of Americans are stressed about their finances.
This does not mean that you should stop spending and using money altogether. It just calls for a better assessment of where you allocate your income. There are expenses that you need to survive and there are those that can live without for the meantime. It can also be as simple as defining needs from mere wants. At the end of the day, the more you monitor your expenses, the better you can manage your money and improve your score.
There are a lot of helpful financial tips to look into when you are serious about improving your credit score this year. When you are able to do this, you now have access to numerous financial benefits including a possible lower interest rate for loans you apply for.