Your credit score will likely be one of the most critical aspects of your financial journey, allowing you to enjoy low-interest rates and unlock various funding options. A good score also allows you to get a better renting experience when shopping for a car and house due to the fast approval process that it comes with. So how do you boost your credit score according to Kevin Cohee?
Get a Handle on Your Payments
Your payment history contributes largely to your credit score, with defaults likely to cause a dip in your rating. Ensure that your credit card payments are paid on time, with delays lasting longer than 30 days being flagged by credit bureaus. Automatic payment options can help with this process, allowing you to avoid missed payments. If you still have recurring subscriptions that you do not need, file for account closure to prevent future setbacks.
Build Your Credit Score Profile
Having a good credit profile is another solution that will allow you to boost your score. Financial expert Kevin Cohee states that one way to do this is by opening accounts added to your credit report. A few options include reward credit cards and credit builder loans. These will often have minimal to no annual fees, allowing you to build your credit score without any financial setbacks. You could also become an authorized user of a loved one’s credit card, allowing you to boost your credit profile until you can securely get your credit card.
Maintain a Low Balance on Your Revolving Accounts
Having a high balance will lead to a high credit utilization rate if you regularly utilize revolving accounts, lowering your credit score even further. To avoid this, aim at keeping your balance low relative to your credit limit. A 30% utilization balance will be ideal for this. Another solution would be requesting a credit limit increase, allowing you to benefit from more funding. Keep in mind that this will still require you to keep your balance low to avoid ruining your credit score.
Consolidate Your Debts
Having multiple debts means you likely have various interest rates and payments, making it difficult to follow up on each loan. Taking a debt consolidation loan could allow you to pay off all your loan accounts, leaving you with only one payment plan to deal with. Borrowers could also benefit from a reduced interest rate, giving you a better chance of paying off your debt to improve your credit score.
Follow Up on Past Due Accounts
If you have due accounts, now is the time to bring them up to date. Overdue payments can remain on your credit report for up to seven years, resulting in a weak credit score. With this in mind, ensure that any due accounts are cleared. It also eliminates late payment fees that could accumulate over the years, creating a significant financial burden. Kevin Cohee suggests enrolling in a debt management plan that could work, allowing you to benefit from lower interest rates and payment plans.
Whether you have a poor credit score or are just starting your financial journey, the above solutions will be worth your while. Make it a point to follow up on your late payments, keep your credit balances to a minimum and take charge of your payment plans.