If you plan on making a large purchase in 2017 such as a home, car, planning on refinancing your current mortgage, or are looking to make a few changes, the largest factor for your credit worthiness is your credit score. Each point could be costing you money compared to those with excellent credit score, so there a few ways that you can increase your score before it’s too late.
Start by Reviewing Your Report
Due to the amount of fraud these days, seemingly easy to steal information to run up charges or even open accounts in your name, you will need to at least check your credit report once a year to review for inaccuracies. The three major credit bureaus offer a free copy of your credit report once a year, however your score will not be included. With most of credit card companies including your credit score on monthly statements, you will not need to pay extra for your credit score from the bureaus.
No More Late Payments
Although days late can still give you late fees and inflate interest rates, in order to show up as a late on your credit report it will need to be at least thirty days late, so unless there is a hardship and you need to contact the credit card company, you should make sure a minimum payment is at least made by the due date. Late payments can stay on your credit report for up to seven years, so even one late could set you back years of having a great score.
Pay Down Debt
The amount of debt you have outstanding compared to the available credit will factor a huge part into your credit score, as lenders do not want to see you max out and not pay the balance each month. If you are in a hole and carrying a balance over, then first you will need to make more than the minimum payment pay down more principal. You may want to even pay off the smallest balances first to give a sense of accomplishment.
Keep Accounts with Zero Balance Open
Once a balance is paid off the first instinct may be to close the account so you do not use it any longer, but actually that will hurt your score. If you keep the card open with a zero balance it will increase your available credit and increase your score. If you can use responsibly, paying off the balance each month will gain credit limit increases, the trick is to spend responsibly.
Take Out a Loan
Depending on how high your outstanding credit card balance is and the interest rate that you are currently paying each month it could actually make sense to take out a personal loan for debt consolidation. With some credit cards approaching 20% interest rate, even dropping in half could save a significant amount, and paying off all of the outstanding credit card balances will then free up all available credit and may not take a credit score hit besides the inquiry for the loan.