There’s nothing more important than having good credit health. Unfortunately, most people only think about it when they really need it. And that’s when they start to worry. If you’re one such individual, you can relax. Here are some measures you can take to improve your credit health.
1. Choose the right credit card
A lot of people use different credit cards for different expenses. So, if you plan on getting a new card for those season tickets you always wanted, make sure that you’re getting the card that best suits your needs.
Ask yourself these questions:
- Does it meet my spending needs?
- Does it have the best rate?
- What’s the annual fee?
- What rewards am I getting?
- What kind of features does it have?
Not fully understanding your credit card can get you into a lot of trouble. So always make sure that you get the right card for you.
2. Calculate the credit that you can afford
If you want to see how much credit you can take on, look at your debt-to-income ratio. To calculate it, divide your total monthly payments by your total monthly income and multiply the result by 100. This ratio lets lenders know how much additional credit you can handle. A lower ratio gives you a better chance of getting that credit
3. Write a letter to your lender to apologize for a late payment
If you have a good credit report but recently made a late payment, you could try to send a letter to your lender and explain what happened. Show them that you’re a loyal customer, that you have a good history of paying everything on time and ask them to remove the late payment from your record. Wait about 30 days before following up. It could work. But remember that your credit card company doesn’t have to remove the delinquency.
4. Dispute credit report errors
Make sure that you check your credit report. And, if you find any errors, report them immediately. This is very important. One such error can severely impact your ability to get approved for credit.
5. Pay your credit card debt at a faster rate
Doing this can lower your credit card utilization and reduce interest fees. So, if you tend to carry balances on your credit cards from month to month, work out a plan to pay the debt faster and lower your credit card utilization rate under 30%. Pay your entire monthly bill, if you can afford it, or make sure that you pay more than the minimum payment. Also, avoid throwing money away on things you don’t need.
6. Never skip your monthly payments
A lot of people think that it’s OK to save up a few months and then pay off the balance in full. But this is a really big mistake, as credit companies are looking to see if you pay your bills on time each month. If you can’t pay everything you owe in full each month, try to at least make the minimum payments. Otherwise, your credit score will suffer.