You probably know by now that your credit report is very important. For something that represents the amount of debt that you use, it should not matter at all. But in our society, this particular report is held in a very high esteem. If you want a secure financial future, you need to make sure that the credit transactions reflected in your credit history are mostly positive, if not all.
When you have positive entries in your credit history, that can increase your credit score. With a high credit score, you are bound to enjoy better deals when it comes to credit accounts. It shows that you are responsible for the money that you borrow. You know how to pay it properly and you understand when to stop using credit before the debt overruns your capabilities to pay it back. These qualities increase your creditworthiness. It will show lenders and creditors that you can be trusted with a credit account. They will not feel the need to raise the interest rate.
Raising your credit score is not something that you can accomplish overnight. However, it might get easier as the government tries to make reforms to help the average consumer. According to reports, it is possible for some consumers to get a higher credit score as changes are being made to the entries that should be included in the credit report. If it applies to you, it is possible to give your credit score a 30-point increase.
But apart from that, there are other things that you can do to add positive entries in your credit report.
How to increase the positive entries in your credit report
According to statistics, the average VantageScore in 2017 was 675. Apparently, this is the highest since 2012. It might be reassuring to know that there are more people who have a high score compared to those who have a low one. But how did they make that happen?
Here are some tips that you can follow to increase the positive entries in your credit report.
Make timely and regular debt payments
A high credit score is all about proving that you are responsible with your debt – specifically your debt payments. Take note that it is not enough that you pay them off. You have to do it in a timely and regular manner. The effects of irresponsible debt payments can be very destructive – especially for your financial future. You have to make sure that you do not miss out on a payment.
To help you with your debt payments, you have to make sure that it is included in your budget plan. This will ensure that it will always be funded – at least if you strictly follow your budget. You can also set up reminders so you will never forget to send your payments. You can even automate your payments. As long as you make sure that you have sufficient funds, you can set up with the bank so your bills are automatically paid off.
Borrow the right type of credit
Another thing that you can do is to borrow the right type of debt. While all debts require payments, they usually require different strategies. For instance, having a high-interest credit card debt does not have to cost you a lot of money if you know how to use it properly. When you use this card, you have to limit its use to an amount that you know you can pay off in full at the end of the month. If you do this, you are still using credit but you will not be charged with interest. It is like you are paying in cash because there is no need to pay for the interest as long as you pay the balance within the grace period.
What is great about using credit cards to boost your credit report is that you do not have to keep applying to use it. As long as you were approved of the card and you do not reach the credit limit, you are free to use it. Just make sure you pay it off properly. Being responsible with your use of the credit card will help increase the positive entries in your credit history.
Correct any mistakes
This tip will not really add positive entries in your report. On the contrary, it will be removing the negative entries that had been placed there by mistake. These mistakes can bring your score down. If successful in removing these mistakes, it can bring the positive entries forward. Of course, before you can correct the mistakes, you have to learn how to monitor your credit report first – and you need to be vigilant in doing it. If you spot a mistake, you need to get in touch with the credit bureau to dispute that wrong entry.
Monitoring your report will also help you spot identity theft from happening. Once you see it, you need to report it immediately so the theft can be stopped. If you fail to act on it immediately, you might end up paying for it yourself just to improve your credit score. Correcting these mistakes, if proven to be real errors, will help increase your score immediately. But you will not be able to do that unless you monitor your credit report.
Doing all of these will help cleanse your credit history. With only positive entries, you will surely improve your credit score in the process and with that, your credit reputation too.
But what should you do in case you do not have a credit history, to begin with? To increase your history, you need to use credit. Obviously, to be allowed to use credit, you need to be deemed creditworthy. Without a credit history, you cannot be considered creditworthy. How can you solve this dilemma?
What to do with the thin history in your credit report?
For a society that puts too much importance in the use of credit, there are quite a lot of us that are not using credit. According to a report in 2015, 26 million Americans are credit-invisible. This means they do not have a credit history with any of the three major credit bureaus. Based on this report, most of these people are from the Black or Hispanic communities in low-income neighborhoods. If they have entries in their credit report, it is not enough to help them get a good credit score.
These are the people who should be doing something about their credit reputation. Fortunately, there are several ways to add more entries in your credit report. It is just like what college students have to do to improve their credit score.
Here are some tips that you can look into.
Get a secure credit card
This is a type of credit card that will require a deposit. That deposit will be your credit limit. When you use the card, you still have to pay off the balance and make sure that deposit remains untouched. This will help you practice paying off your credit purchases.
Get a store credit card
This is only okay if you plan on going to that store all the time. It will give you a lot of reasons to use the card and that can quickly help you increase the entries in your credit report.
Get in touch with one of the bills you are paying
Although they are not required, it is possible for service providers to submit your payment behavior to the credit bureaus. You just have to call them up to ask if they can do it for you.
These are only a few of the things you can do to help increase the entries in your credit history. When you have sufficient entries in your credit report, it will help increase your credit score. Of course, using credit is not the end of it all. You have to pay it back and show that you are responsible when it comes to using credit. To pay it back and try to keep yourself from borrowing too much at one time.