Most struggling college students would agree that credit cards are amazing. The idea of “free money” to buy the things you want is often too good to pass up. Credit cards seem to be an answer to many of our financial problems. Sadly though, they often quickly become a large part of our financial problems over time. It is easy to get sucked into the world of instant credit and online, one-click shopping. But as our credit card debts increase and our credit scores decline, it becomes difficult to stop the downward spiral. If this sounds like your current situation, we are here to tell you not to give up yet. Improve your credit score on your own with some DIY credit repair. Here are four simple ways to get started.
1. Understand how your credit score is calculated.
There are multiple credit scoring companies out there, but they all use the same, basic factors to determine your credit score. Those five factors are:
Understanding these factors and how they work together to create your credit score is a big step in helping you create a plan for dedicated credit repair. A higher credit score can make getting a mortgage loan, purchasing a car, or even bypassing a security deposit on utilities for your new apartment easier.
2. Pay your bills on time.
The most heavily weighted factor in your credit score is your payment history. You may want to forget about your late payments and missed bills, but your credit report remembers each and every one. Lenders track your payment history to see if you paid your bills on time. Consistently paying your bills on time shows lenders that you are reliable and more likely to pay back your debts in the future. Working on paying your bills on time is one of the best ways to improve your credit score, with no credit repair lawyer needed. An easy way to help pay your bills on time is to set up online alerts or automatic bill payments through your online banking account, so you don’t forget to pay each month.
3. Keep your credit utilization low.
Credit card utilization is the second most significant factor in configuring your credit score. Lowing this number — and keeping it low — will help increase your credit score. In a nutshell, your credit card utilization rate is how much you currently owe on your credit cards divided by your credit limit. Let’s say, your credit limit is $10,000 and you currently have a balance of $5,000, your credit utilization rate would be 50%.
By maintaining a low credit utilization rate, lenders can see how well you manage your credit limits and that you are not overspending. Keeping this rate below 30% each month (and ultimately below 10%) will help boost your credit score.
Help lower this rate by:
4. Check your credit report for errors.
Up to 25% of Americans have an error on their credit report and don’t even know it. These errors, such as fraudulent or duplicated accounts or misreported payments, can harm your credit score. You can catch mistakes and dispute them by closely monitoring your credit report. If successfully removed, your credit score will benefit.
