Let’s face it, your credit score can be like a bad haircut. One mistake can leave you feeling embarrassed and filled with regret for a period of time (maybe the world isn’t ready yet for your extra short homemade bangs or fashion forward mullet). You’ll do anything to avoid letting anyone know about it or even see it. However, there is hope. Most of us learn from our mistakes and take the right steps to avoid repeating them in the future. The same rules apply to our credit score; it’s never too late and there’s always a way to “grow it back”.
How do we grow our credit score back? It’s simple as long as you have patience. If you don’t know about the following 4 tips, we suggest you start with them as soon as possible…
1. Check your credit score often
Simple, right? Apparently, it’s easier said than done. Creating the habit of checking your score more frequently will allow you to notice more quickly when it changes. This will help you recall any recent activity that might have caused the change. From there, you can begin to associate what types of score-decreasing (or score-increasing) behaviors you should take note of. People who tend to check their score more often practice habits that increase the chances of making a positive impact on their score.
You can’t work on your credit score if you don’t know what it is. So start by checking your score more frequently (probably as often as you check for likes on your Facebook posts). To help you do so, Credit Sesame provides members with free access to their credit score. It’s a great place to start building on your new routine.
2. Make that debt look smaller
This sounds like common sense but the real trick here is understanding why it matters. To avoid overwhelming yourself with terms like “credit utilization”, here’s a better way to look at it: strive to make the amount you owe look smaller when compared to all the “money” you have access to borrow as credit.
What does this mean? Paying off your debts or increasing the amount you can borrow (while not spending it) improves an important factor that these credit score algorithms look at when calculating your score. If the math gets overwhelming, just remember the rhyme: avoid the sweat, pay the debt.
3. Pay your bills on time
This is another common sense suggestion. It’s important to note that establishing a positive payment history is one of the most important factors in what determines your score. Credit bureaus want to see and feel comfortable that you are able to consistently meet their payment obligations.
There are many different ways you can stay on top of bill payments including setting up automatic payments with your lender. You can also do it the old fashioned way and write physical notes or set reminders on your calendar.
Even if you have the memory of an elephant and are obsessively compulsive in never being late, you’re better off setting up automatic payments. Just set it and forget it! Building upon this history of paying on time in itself can contribute tremendously towards your score.
4. Start these habits now!
Building up your credit score takes time. It’s not enough to establish a good payment history; you need time as well. This is referred to as “credit age”. The longer you’ve been leveraging credit and paying it off, the better.
Lenders are generally conservative and want to feel comfortable with individuals requesting credit or loans. They want to work with people who can handle credit products responsibly. Lenders, most likely, don’t know you personally, so the only information they have about you is your credit history.
Lending money to total strangers would make most people feel uncomfortable, even if you claim to be responsible. To build trust with lenders, focus on consistency and you’ll be well on your way
By following all the habits mentioned above and doing it consistently over a period of time, you should begin to see your credit score get better. Again, the credit score is a reflection of your ability to manage your credit, so practice makes perfect. Like our bad haircut analogy in the beginning, your credit may have some bald spots at first, but you can learn to get better at managing it.
You can start these habits now by getting your free score from Credit Sesame. It only takes 90 seconds to sign up and you’ll be on your way to rocking that beautiful mane of a credit score in no time. For more information on this or any of our topics, please pop over to our SesameThrive Community, and join the conversation.