In our current society, it’s almost impossible to get by without having credit. Your credit score can be pulled for any number of reasons like if you’re looking to buy a home, are wanting to open a line of credit, or are needing a personal loan for some reason. And if your score isn’t high enough, it can have a severe impact on your financial future and your ability to qualify for the things you need in life. So whether you just have decent credit or you’re trying to work your way back up from bad credit, here are three financial habits you should start:
Get Your Bills Paid On Time
One of the biggest reasons people take a hit to their credit is due to not paying their bills on time. While this can sometimes be due to not having the funds you need in order to make the payments, many people often just forget to get their payment in on time out of their own disorganization. To keep this from happening to you, Shammara Lawrence, a contributor to NBC News, recommends that you set up alerts on your phone or through your calendar to remind you when things are due. This will help you to remember to get your payment in before its due date and keep you from missing a payment or paying late.
Keep Your Credit Utilization Ratio Low
In order for you to seem like a good credit risk to future creditors, you need to be able to show them that you’ve used your previous credit wisely. Your credit score can be a good reflection of this, and one of the factors that impacts your credit score is your credit utilization ratio. Your credit utilization ratio refers to how much credit you’re using compared to how much credit is available to you. According to Ismat Mangla, a contributor to Experian.com, you should ideally keep this ratio below 30 percent, meaning that you never use more than 30 percent of the credit you have. By staying below this magic number, you should start to see your credit scores improve.
Don’t Apply For Too Much New Credit Too Quickly
Every time you apply for a line of credit, your credit score will take some kind of hit. So if you’re wanting to build your credit score, Rebecca Lake, a contributor to SmartAssets.com, advises that you apply for new lines of credit sparingly and that you do so at the right time. If you’re going to be doing something that requires you to have a good credit score, like applying for a home loan, try not to open any other lines of credit leading up to this so you can keep your credit score as high as possible.
If you’re ready to start improving your credit, consider using the tips mentioned above to help you begin new habits that will make this possible.