A better credit score overnight isn’t really feasible. It takes time and good practices to increase your score. However, if you’re following any of the steps below, you’ll on the right path to having an excellent credit report score (FICO score). So, let’s get started!
Step 1: Modify your debt
Watching an ugly number grow each month on your credit card statement can be defeating, especially when interest eats away your chance to lower that number down. A personal loan or debt consolidation loan, however, can help reduce or eliminate balances. It may seem meaningless to reallocate your debt since your debt’s ramification is still the same. That being said, personal/consolidation loans offer you a way to lower the interest rate you’ve compiled. Ultimately, this could save you money over time and help lift your credit score a few points.
Step 2: Consider your credit card as a debit card
Try to think of your credit card as a debit card: only spend the money if you have it. If there’s only one step you complete out of this blog, this is the one! Get in the habit of paying off your credit card balance every time you spend money. This is definitely easier said than done but once you can pay off your balance each month, it will dramatically boost your FICO score as time goes on.
Step 3: Invest in MICRO-PAYMENTS, not one large sum
Interestingly enough, micro-payments cut the odds of you having a bigger balance displaying when your issuer takes a “credit snapshot” to report to the credit bureau. Therefore, making several small payments over one large payment at the end of the month is an easy strategy to boost your FICO number. In addition, it will start to feel like you’re making headway on your payments. Do you ever get a sense of accomplishment each time you pay off your debt? Well, don’t limit yourself from that feeling, especially when this once-a-month feeling can help you in the long run.
Step 4: Late payment? Don’t panic. Call your credit card company
Payment history is the single greatest influencer on your credit score. So, it makes complete sense to do whatever you possibly can to stay on top of payments. If you can only make the minimum payment, do it! A minimum payment is way better than no payment. Delinquent sums stay on your record for seven years (it’s pretty much the FICO equivalent of breaking a mirror). A good tip to avoid missing a payment is to set reminders. At the same time, if you are going to be late on a payment, it never hurts to call your credit card company and ask if they’ll give you an extension. The worst they’ll say is no.
Step 5: Ask yourself, do you really need it?
A cup of Joe in the morning may feel important (or necessary) but is the instant gratification worth the cost later? Being mindful of the little costs such as daily coffee will save money over time. To help you visualize this, make a spreadsheet and each time you avoid treating yourself to a real nice Patagonia fleece or a dinner out, track it. After a few weeks, you’ll be amazed at how much you saved yourself from spending. Not to mention, the available fund you’ll have to put toward your credit card debt and, ultimately, help boost that FICO score.
Have specific questions about your FICO score? Want someone to talk it over with? Speak with a GreenPath Financial Counselor for free at 877-337-3399.