It happens. You take out the credit card to buy a new laptop for college or go on vacation, and before you know it, you’re in way over your head, and you can’t even get approved for an apartment! You can improve your credit score without having to eliminate all of your debt. Here are three ways to do that and things to avoid, so you don’t lower it.
Take out a Personal Loan
It might seem strange to go into more debt to raise your score necessarily, but lots of people think of credit card consolidation to fix their credit because this kind of debt is different. By taking out a loan to consolidate your credit card debt, you are paying off those cards and giving yourself one monthly payment that might even be more affordable than what you’re currently paying to multiple banks. Credit card consolidation increases your overall available credit and decreases the amount of credit used. This instantly boosts your credit score, and you didn’t have to eliminate all of your debt to do it!
Make Two Monthly Payments
No, you do not have to find extra cash to put towards your debt. Instead, split the minimum payment in half. Pay the first half ten days before your payment is due and the second half two days before your payment is due (or whatever works for you as long as you pay the full amount on time). Though you’ve only paid the minimum, it will register as though you have made two payments on your account and will positively impact your credit score.
Don’t Apply for Anything!
It might seem like a no brainer to stop attempting to add more debt onto yourself, but not always. Debt comes in many forms, including the card your bank keeps sending to you because you’ve been a loyal customer and the card at your favorite clothing store that will give you 15% off everything you’re buying. These cards are only going to lower your credit score because they become hard inquiries on your credit account. Avoid them at all costs until your credit score and debt is at a place you think is stable. Until then, don’t even flirt with more debt or inquires.
There are few ways to increase your credit score but so many ways to lower it. It’s important to note a few of these so that you can be sure to avoid them and keep your credit score on the rise.
Late Payments/Missed Payments
- The easiest way to lower your credit score is to miss payments. Credit borrows want their money, and when you provide it after the due date or worse, not at all, it will be detrimental to your credit score.
Accounts are Too New
- This is hard to avoid for those who are establishing credit. Only time and loyalty to an ethical bank can improve this.
Using Over 35% of the Available Credit
- Try to keep the amount of money you spend on credit cards below 35% of the available credit.
Millions of Americans are in debt; it’s nothing to be ashamed of. However, just because you’re in debt, that doesn’t mean your credit has to look like it. Consider these easy ways to help raise your credit score and avoid the pitfalls, so you don’t accidentally lower your score.