Is your credit score below 670?
If yes, you probably don’t need us to tell you that you have a bad credit score. You already know it. What you might not know, though, is as many as 50 percent of America’s credit-active consumers have bad credit.
Bad credit can make your financial life – and life in general – difficult in many ways. Getting approved for a traditional loan is a nightmare, landlords can reject your tenant application, and some employers can even cite your credit as a reason for denying you certain jobs.
Clearly, it’s in your best interest that you build and maintain good credit. How do you pull that off?
Here are some helpful habits that will get you there.
Learn to Save
Saving doesn’t have a direct influence on your credit score, but it’s one of the most impactful habits you can develop when you want to build credit.
You see, one of the main reasons people end up with bad credit is unpaid debt. If you take out a loan and become a late payer or default on it, your credit score will take a major hit.
Although there’s nothing wrong with taking out a loan, some forms of debt are unnecessary and often a result of financial recklessness. For instance, you don’t need to take out a vacation loan. This is something you should save for.
So, when you learn to save, you’ll find that your need for getting loans reduces. Save for a mortgage and auto loans, you might not need to take out any other loan. Building a good loan repayment history is key to building credit, but the same loans can also hurt your credit if you default.
Saving also helps keep a bank account active. Dormant accounts count negatively on your credit, so putting some savings into such accounts is an ideal way to keep them active.
Pay Your Utility Bills on Time
It’s incredibly important that you settle your loan and credit card accounts on time. These have a direct impact on your credit because they’re recorded on your credit report.
What about utility bills, though?
Sure, rent payments and other utility bills don’t show up on your credit report and don’t have a direct effect on your credit score, but paying them on time as well is a habit that can ultimately help build your credit.
Although uncommon, a utility service provider can list your account with a debt collection service if you fail to pay a utility bill on time. Anything that goes to a debt collection service will likely end up on your credit report. This will hurt your score.
Therefore, don’t just assume that utility bills can’t affect your credit. Treat them as seriously as you treat loan repayments.
Treat Your Credit Cards with Caution
There’s nothing wrong with having one or two credit cards. However, there’s everything wrong if you’re always maxing out those cards every month.
A high credit utilization ratio hurts your credit. A low ratio doesn’t. Aim to spend no more than 30 percent of your credit limit every month.
As you try to develop these habits, keep in mind that you can always seek the help of a credit repair service. Check out this company website to learn how you’ll benefit.
Good Money Habits Will Build Your Credit Score
Bad money habits will destroy your credit score. Good money habits will build your credit. It’s as simple as that, really.
Embrace these habits and you’ll be on your way to good or even excellent credit. And remember to keep reading our blog for more money tips.