When I was a college student I didn’t have a care in the world about what my credit score was. They handed credit cards out like candy and I accepted them. I still lived with my parents and there was nothing to worry about. However, I had to grow up eventually. It wasn’t until I decided to move out on my own that I really took charge of my credit, and I have to admit that it was bad!
I had no idea that my credit score was used for so many things. After all, when you’re getting those credit cards on campus, they don’t tell you to be careful. They just want you to sign up. I had no idea that I needed to have good credit in order to rent an apartment, get my utilities turned on and so much more. Fast forward to when it was time to purchase my first home. Even though I was in the military and I didn’t need a very high credit score to get a loan, due to my military benefits, it was a good idea to have a score as high as possible in order to get the best loan available. Today I want to share how you can improve your credit score using a few tips that I personally used on my way to financial freedom.
What you can do now!
Check your credit report
This is your first step. You can order a free online report and check for errors. You may be surprised at what’s on your report that you quite possibly had no idea about. Be sure that the accounts are yours, however, make sure that the amounts are correct and there are no incorrect late payments. If you find errors, dispute them with the credit bureau. Know that it’s perfectly ok to ask for and check your own credit report.
What you do after!
Reduce the debt you owe
Limit the use of your credit cards now! Come up with a budget that will enable you to pay off the cards with the highest amount or highest interest first, while paying minimum payments on the smaller accounts.
Keep your balances low
High balances can affect your credit score so try and keep your balance as low as possible. A rule of thumb is only to use 30% of your balance. Carrying a high balance can be seen as a risk and may be an indication that you are having financial difficulty (although this may not be the case), and may lower your credit score. Navy Federal gives you the option to keep track of your credit score, and it’s also available on the go via their mobile app as well.
Use payment reminders
Late payments can put a ding on your credit score. Use any available means to make sure that payments are made on time. If you can, enroll in automatic payments that will be debited from your bank account so that you won’t have to worry about missing a payment. The longer you pay your bills on time, the better your credit score will be.
Apply for new credit only if needed
Don’t go around applying for lots of cards or loans. However, opening a new account and using the above tips such as paying responsibly and on time will help improve your credit score in the long run. If your credit is very poor, you may consider applying for a secured credit card. A secured card requires you to make a cash deposit which then becomes your line of credit. For example if you open an account with $1,000, you now have a secured credit card that you can charge up to $1,000.
I remember when I first joined the military, as I mentioned my credit wasn’t great. I became a member of Navy Federal Credit Union and applied for a secured credit card which helped to improve my credit immensely.
Navy Federal offers card options to help build or even restore your credit.
Remember, there is no fast way to repair your credit. It all takes time and you have to be responsible. Learn more about how you can improve your personal finances at MakingCents, Navy Federal’s online resource for financial education.