This post was sponsored by Lexington Law.
Everyone has a different approach to their credit score. I often relate to it as a measure of your financial health. And just like health, you will have the health nuts who check where they stand all the time, the balanced people that stay on track about right in the middle, and people who don’t have super healthy habits, and generally no idea on how to get better.
Well, we all know how to get better, but it seems hard. Why? Because we see a super fit athlete run a marathon and get self-conscious about having gained five pounds over the holidays. We don’t see all the amount of effort it took for them to get there. Years and years of rigorous training.
The same goes about your credit score and credit report. You need to do all you can in order to keep the best score possible. That may take a while, but it will affect the decisions of lenders when you need to get a loan, a mortgage, or to finance a project.
So what can you do about it?
- Look for mistakes
If your credit score is lower than you expected, there may be a mistake somewhere. You may have been the victim of identity theft, and other people may have gotten credit on your behalf, or the credit company may hold a different address or personal details about you that are incorrect.
You can clean up your Credit Report and have companies dig into your history to find out if there are any errors or wrong information that can be removed.
If you found errors on your credit report, click here to Save $50 off Credit Repair Service – Applies to first-work fee for each spouse sign-up.
- Better credit habits
You can then start implementing small habits to get your credit in check. If you have credit card debt, try paying more than the minimum balance each month. That will help reduce your credit utilization, and improve your credit score.
But it will most importantly help you save thousands of dollars in interest. The same goes for unsecured loans, and even for your mortgage! A little extra payment here and there, these months you get an extra paycheck or a Christmas bonus, snowball over time and help you get financially better.
- Improve your credit
That said, the best thing you can do to improve your finances is improve your credit. Why is that? Because if your credit isn’t great, you are going to be paying higher interest on all of your debt. Secured and unsecured. And over the course of 30+ years of adult life, even a 1% interest rate difference adds up to huge amounts of interest. Interest you shouldn’t have had to pay if you had better credit.
Take control of your credit right now and start refinancing your debt once you get a better credit score.
Having good credit will help you manage your finances better, and free up more room in your budget every month, once you start paying lower interest rates on your debt.
- Be wise about credit
Credit is surprisingly easy to secure, and you want to proceed very carefully. Make sure you can afford to repay the debt you take on, as bankruptcy and other judgments will appear for several years on your credit report.
If you can’t meet your monthly debt obligations, reach out to your creditors to negotiate a payment plan, or to an agency that will consolidate your debt on your behalf. You may end up paying more over the long term, but that is better than going through bankruptcy.
If your credit is low, try paying for things in cash instead of charging your credit card. You can keep using it, as long as you can pay the item in full with your next statement. That can give you up to 50 days of interest-free credit. Careful though, once the interest starts kicking in, making only the minimum payment will take months to clear the debt.
Getting a better credit score is about getting better money management habits. It will take time, but your future self will thank you for it.