“How do I improve my credit score?” is the question that most people ask these days. The easy availability of money through credit cards has exposed many people to risk of debt traps. If you are paying only the minimum amount on credit cards every month, you should know the credit card debt management tips to improve your credit score.
Know your credit rating
The first step in debt management is to get the information on your credit rating from all the three exchanges: Experian, TransUnion and Equifax. This will help you to know the scars the debts have left on your credit score. “My credit score” can be obtained from the credit bureaus for a small fee.
Read Your Credit Report Carefully
Credit bureaus give free credit report once a year. You should collect your yearly report without fail. If there are any errors in the report, you should inform the respective bureau immediately and get them fixed. A small error in report can cost you a lot. You may have to pay higher interest rates on loans due to it.
Reduce Your Expenses
Cutting down on expenses may seem impossible. However, a little planning can bring down the monthly expenses by at least 10 percent. Make a budget every month and stick to it. Keep a record of your expenses. This will help in tracking the amount of money required for utilities, groceries, education and healthcare every month. It will also help to identify unnecessary expenditure. Try to control the habit of splurging beyond your means.
Use Only One Credit Card
The more the number of credit cards , the harder it is to manage them. Therefore, use only one or two credit cards . If you have a handful of them, do not make the mistake of cancelling them as that may hurt your credit score. Many people ask, “How can my credit score suffer due to cancellation of them?” Here is the answer: When you cancel it, your debt to credit ratio dips and if you close an old account, the time duration for which you had owned a credit card reduces. These things can impact your credit rating negatively.
Pay Debts With High Interest Rates First
You should first clear debts that have the highest interest rates. This will help you save money on the interest of expensive debts. Once, you have cleared the most expensive debt, start working towards paying off the second most expensive debt, and so on.
Read Credit Card Statements
You should read the statements carefully. Check if all the transactions are correct and the last payment towards the credit card bill is reflected. If you have not paid your dues on time, check if the interest and late fee charged are correct or not.
Pay More Than Just Minimum
If you pay only the minimum required amount on credit cards , you will not be able to come out of credit card debt. Therefore, make efforts of paying more than the minimum amount ever month.
Seek Professional Help
If nothing seems to help, get advice from credit repair professionals. They will study your situation and develop a tailor-made solution to meet your needs.
Hope the above tips have answered your question, “How to improve my credit score?”