Since 47% of Americans have either no credit or below-prime credit scores, you’re far from alone when looking to improve your FICO number. Increasing your credit score can be a challenge, but it’s completely possible when you take the right kind of action.
Here, we’re going to discuss some strategies for building better credit and getting more financial opportunities. Read on to learn how women like you can improve both their FICO scores and their financial futures ASAP.
1. Check Your Credit Report Frequently
Checking your credit score regularly keeps you in the loop about how you’re doing. You’ll know what you’re working with and can figure out what steps you should take to improve. You also will have the chance to check for errors when you do this.
For example, if it incorrectly states that you did not make a payment on time, you will know to go look for confirmation of that payment in your email or records. You can then contact the company to correct the issue.
When checking your credit score, make sure that you only use soft inquiries. Hard inquiries lower your credit score slightly, so you don’t want to make them regularly.
You likely can monitor your score for free through either your bank or your credit card company. Look for a “FICO score” tab on the website where you pay your bill (or on the company website if you do not make payments online). This will show you your updated score and give you information on it without dinging the number.
2. Pay All Bills on Time
Failing to pay bills and making late payments is the easiest way to plummet your credit score. If you make a payment just 30 days late, your credit score could drop 100 points. This will hurt a lot for those trying to establish credit or improve their overall score.
The hit will be bad regardless of the bill that you miss. Note, however, that you’ll be dinged more for having late mortgage and housing-related payments.
In some cases, it may be impossible to pay on time due to a financial crisis. If you’re struggling, it’s important to work with an expert financial advisor to figure out what you can do. This may mean saving more money, but it also could be as simple as moving funds around and limiting spending in other unnecessary areas.
3. Pay More Than the Minimum
Keeping account balances on credit cards low reduces stress. You don’t need to worry about making large payments. You also don’t need to contend with anxieties related to interest.
A good rule of thumb is to keep all balances below 75% of your available credit line. Having large balances of outstanding credit or loans hurts your score pretty quickly.
This means that you should never spend more than you make. It also means that you need to pay more than the minimum balance on credit cards. Try to get almost everything paid off each time a statement comes in.
4. Don’t Request Too Much New Credit
When you’re low on money, it’s tempting to sign up for new credit cards that you don’t need. Signing up actually counts as a hard inquiry and dings your score immediately.
A new card also won’t solve your problem, it will just become another bill to pay off in your credit mix. Instead, focus on paying off your existing bills. The longer that you pay off large chunks of your bill on time, the more your score will increase.
If you truly do need more funds, you can request an increase in your credit line from carriers that you already hold cards with. This is in no way foolproof as those with low credit will often be rejected. However, it is something to look into and try.
5. Work With Experts Who Will Listen
Managing money and credit scores is extremely challenging. Since 72% of Americans are stressed about money already, it likely will also be an anxiety-inducing endeavor.
Luckily, you don’t need to be alone in the process of improving your financial profile. Working with a financial advisor and getting input, tools, and strategies for FICO improvement can help. You won’t be left to decide what to do on your own and can always ask questions about improving your financial health.
It’s an even better idea to work with professionals who specifically tailor their services to women. It’s challenging to find finance-related environments where we feel acknowledged, respected, and appreciated. Working with women who work for women is an ideal way to engage in meaningful and deep conversations where asking questions is encouraged.
6. Leave Old Accounts Open
If you have an old account that you aren’t using, it can be tempting to close it. If you close an account that you still have a balance on, it will greatly lower your available credit in other accounts. Other companies will not look favorably on this decision, and it will hurt your score.
Part of any credit score is your “age of revolving credit.” This looks at how long you have had credit cards. Those who have carried them for a long time look more appealing to lenders that give out loans and raise credit lines.
If you close old accounts prematurely, your age of revolving credit will decrease. It’s important that you work with an expert to come up with ways to resolve delinquent accounts and charge-offs the right way. This is the best way to keep your credit score looking good.
Improve Your Credit Score With Professional Assistance
Now that you know the top ways to improve your credit score and expand your financial horizons, it’s time to get started.
Our team is committed to providing forward-thinking women with monetary advice and services to keep them financially healthy. Contact us to discuss how you can maintain your current lifestyle while still setting money aside for the future.