How to Improve Your Credit Score Without Too Much Pain

Your credit score has the power to dictate a lot of things in your life, from the fun and frivolous to the seriously life-sustaining necessities you can’t do without. If you need to improve your credit score, like millions of other Australians, do something about it, starting now.

This isn’t some dreadful plan to deprive yourself of everything that makes life worthwhile, on the contrary. You can do this and still enjoy life! No matter how bad it looks, there is always something that can be done.

Here are five ideas to get you started on raising your credit score, without sacrificing everything.

Focus on credit card management

The way you use your card influences your score, in addition to how you handle payments. If you only use roughly 30 percent of the credit available to you on your card, you’re in good shape, However, raising that number shows creditors that you may have a tendency to mismanage finances by over-spending.

Keep card use under control from the moment it’s issued to you, rather than waiting until a problem emerges. Most people simply track spending and payments, trying to maintain a balance between how much they make and how much they can afford to buy.

If you calculate the scenario to a fixed-number science, you’re in much greater control of your credit score.

Pay in a timely manner

A hefty 40 percent of your credit score is based on your established history of timely payments. If that figure makes you squirm, it’s time to organise your budget in such a manner that makes paying consistently a little easier.

To improve your credit score, start moving money into accounts where you’re less likely to spend it, and just let it sit there until the bills begin to come in. Avoid cashing your wages at all costs, because studies show people are far more irresponsible when they do this!

While paying on time may seem like an obvious solution to a poor credit profile, it’s much easier said than done. Take a closer look at your spending habits, and start curbing the excess.

Consider the benefits of consolidation

Since payment history makes up that towering 40 percent of your credit score, it’s sometimes a good idea to take out a personal loan and use it to lower debt. This will make paying for each bill a little less painful, because each is lowered.

For example, spreading a loan across five credit card bills shortens the period of time which you’re paying all that interest, saving you perhaps hundreds, even if you’re only paying the minimum. This helps improve your credit score too!

Consolidation can restructure debt to much more favorable terms, along with improving your credit score, if you proceed with caution. Sit down with a reputable loan service, and discuss options. Think about it overnight or longer, then decide on the best course of action.

Never apply for too many new lines of credit

A lot of consumers don’t know that they can lower their credit score just by having a company examine it. The credit check process itself can slash your score by up to five points!

As you make the effort to improve your credit score and create more optimum financial circumstances for your household, limit the number of applications you submit. This includes credit cards, store cards and loans that aren’t designed to restructure or reduce debt. Rather than adding new lines of credit, manage what you have more efficiently.

Add diversity to your credit history

Your credit score will show signs of improvement if you spread your resources around, because it demonstrates a keen ability to manage finances in the eyes of the major credit bureaus.

For example, two credit cards, your mortgage and car payment, plus some type of loan looks like you’re handling life from every angle, if you pay them all promptly each month. So long as your debt-to-earnings ratio isn’t through the roof, you look good on paper and your score will benefit. Not to mention being able to get your hands on more of the things you want in life.

In Summary

You can reasonably expect to improve your credit score by an impressive amount without sacrificing too much in life.

In fact, the biggest drawbacks are usually time and tediousness: You’ll need to spend a lot of time crunching the numbers, and be very tedious with your spending. However, there’s a really big payoff for you, once you succeed.

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