How To Improve Your Credit Score - Personal Finance Basics

The health of your credit score is vitally important to your personal finances for a number of reasons. To begin with quality credit scores are exactly what lenders are looking for when they decide whether or not they will lend you money. Often times insurance brokers and landlords will research your credit when determining whether or not to choose you as a client or possible tenant. This article will show you a number of ways of how to improve your credit score and will assist with your personal finance basics.

1. Pay Your Bills On Time

The reason why this is number one on my list is due to the fact that this is probably the most valuable rule to follow when attempting to improve your credit score. If you visit your financial institution and are applying for a personal loan the first thing the bank will look at is if you regularly make bill payments on time. This includes everything like your cable, home or cell phone, heat and hydro or any other types of bills. Your credit score will directly reflect if you make, miss or are late with your payments. If they discover that you always miss or are late for payments, there is a good chance they will not approve you for the loan.

Some tips so you will never miss another bill payment:

-Open a separate checking account and be sure to deposit enough money at the start of every month for your bills so you always have enough.

-Create automated email reminders a few days prior to when your bills are due.

-Set up automatic payments with online banking.

-Keep a written calendar of when each bill is due. Update and check it regularly.

-Buy everything you can with cash. Not having a credit card means one less bill to worry about.

2. Never Let Bills Go To Collections

This may seem very simple but these collection agency's exist for a reason. You can't forget about your bills. They won't just disappear. If any of your overdue bills go to a collection agency you are going to pay surcharges, major interest and your credit rating will be shot.

3. Keep Credit Card Balances Low

The most simple of personal finance basics is if you must use a credit card, keep the balance at zero or as low as possible. The less of your available credit you use the better. The number that most reflects your credit score the most recent balance on your statement. Even if you pay your bill in full every month you should never exceed more than 30% of your available credit. The less you use the better.

4. Use Old Your Credit Cards

This may seem a bit odd but don't change from one credit card company to another. If you jump around and continually close or cancel credit cards you may be damaging your credit rating. Try to use the very first credit card you every had and stick with it. If you have switched to a different credit card, try and keep that old card active and use it every once in a while. Make certain you pay the entire balance every month.

5. Check Your Scores Once A Year

Credit scores can change fast. One day everything might be excellent and tomorrow your credit score might be awful. Checking your score annually is a personal finance basic tip we all should follow. This allows the opportunity to correct any errors that the banks or you might have made. Be careful though. If you check your credit rating more than once a year or on a regular basis it will affect your scores in a negative way. Your best option is to check once a year and only once a year. Be sure to dispute any inaccuracies such as missed or late payments when you paid on time or there might be other problems that may come up.

High credit scores create the opportunity for lower interest rates on mortgages, car loans, personal loans and credit cards. One of the earliest personal finance basics you need to follow is to maintain the health of your credit score so you can take advantage all sorts of different financial opportunities. The sooner you can fix any issues you might have with your credit, the more quickly you will be back on track with it. If you follow these tips you will be completely on your way to improving the health of your credit score.