I pose a suggestion on a new years resolution. It's not too late to
start, and I even offer advice on how to achieve it. This is a
resolution, if executed, will impact probably most if not all of the
other resolutions you have either already made or had in mind.
Fix Your Credit
The national average credit score is 634, which falls into the "poor" category. That means, the majority of American's have bad credit. This is attributed to by a lot of things such as:
1) It's not taught in school.
2) There isn't a focus on credit until you need it. (ie: mortgage, auto loan)
3) It isn't something most people truly understand.
Still, fixing your credit score will impact your other resolutions such as, getting that new car you wanted, getting the job you actually like, or getting the house you've always wanted. So, that being said, let's talk about how.
Fix Your Credit
The national average credit score is 634, which falls into the "poor" category. That means, the majority of American's have bad credit. This is attributed to by a lot of things such as:
1) It's not taught in school.
2) There isn't a focus on credit until you need it. (ie: mortgage, auto loan)
3) It isn't something most people truly understand.
Still, fixing your credit score will impact your other resolutions such as, getting that new car you wanted, getting the job you actually like, or getting the house you've always wanted. So, that being said, let's talk about how.
- Pay loans early and make double payments: If you can't afford double payments, then early payments are key. This feeds into your good credit history and builds upon what you have. Creditors like this.
- Setup auto bill pay on all of your credit cards and bills: Late payments are often not the cause of not having the funds, rather forgetting to pay the bill all together. Late payments are a killer on a credit history and drain your credit score right down.
- Don't close old credit cards: You want to increase your average age of open credit lines. I know that there is an itch to just close a credit card after you've paid it off, especially if it has a speckled past, but don't do it. Keep it open and in good standing.
- Variety: Having multiple types of credit cards is key. You don't want to have too many, but a credit card and a store credit card or two is important to have. Add this to your auto loan and mortgage and perhaps even a student loan and you have a decent variety of credit out there.
- Request higher limits: You can and should call your credit card company once every 6 months to increase your credit card limit. Having a higher limit helps boost your credit score and credit grade. The more available credit to you, the better. Lenders like this.
- Request a lower APR: You can also contact your credit card company and request for them to lower your APR. This is not unheard of and sometimes works.
- Don't max out your cards: Maxing out your credit cards is a bad thing. Carrying around max debt is viewed in a very negative light by potential lenders.
- Use your credit: The above being said, you do want to utilize your credit. Having a 0% utilization rate on your total available credit is a bad thing, just do not exceed 30% utilization if you can avoid it.
- BONUS TIP: Figure out your debt to income ratio. This will set you up good for the new year and help you identify how much money you can throw at your debts.
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