Spring is a great time to refresh your space and tackle household cleaning chores, but don’t ignore the mess that has built up in other, less visible, areas of your life either. In fact, clutter and chaos can quickly overtake many aspects of your financial life when you aren’t paying attention especially when it comes to your credit.
Taking steps to clean up your credit this spring can have a positive impact on your overall finances. After all, a higher credit score ensures you qualify for loans and credit cards with lower interest rates which can reduce monthly payments. It can also lead to lower insurance premiums and qualify for a more robust rewards credit card that offers many money-saving perks.
Reviving your credit doesn’t have to be overwhelming. To get started, follow this detailed credit clean-up guide with 5 simple steps to improve your credit score this spring.
Review and Track Your Credit Score
Before you can begin cleaning up your credit, you need to know where you stand first. Take a few moments to check your credit score and review your credit report through AnnualCreditReport.com where you can get access to free reports from all three major credit reporting bureaus once a year. Many banks and credit card companies also provide free access to your score or you can use credit monitoring apps like Credit Karma for real-time tracking updates and alerts.
Regularly monitoring your credit score helps you detect potential issues early before a problem escalates, such as credit reporting errors or identity theft, both of which could negatively impact your score.
Pay Down Debt to Boost Credit Utilization
Credit utilization is one of the most important factors used to determine your credit score, which refers to the total amount of credit used versus the total available credit. Consumers who are close to maxing out their available credit limits appear riskier to lenders. Keeping balances low shows you can manage credit responsibly and handle debt, something lenders consider. If you’re carrying high balances, paying down debt is crucial for improving your credit score.
The biggest problem you may face though is figuring out how to reduce balances faster. To begin, always focus on higher-interest debt first and pay double to triple the minimum due each month. Consolidating credit card debt using a lower-interest debt consolidation loan is another option, or move your debt to a zero balance transfer card which offers no interest periods of 12 to 21 months. Review sites like CardRates.com to find the best balance transfer card for your needs and current credit rating.
Opt for a Secured Credit Card
Improving your credit score may feel like an uphill battle when your score is suffering, but there are effective tools that can ease the process such as a secured credit card. Unlike traditional credit cards, secured credit cards require a cash deposit which is used as collateral to back purchases and usually represents the credit limit. Using a secured credit card responsibly and paying off the balance on time can help you build a positive credit history which will lead to an improving credit score. You can find a detailed review of the best-secured credit cards at BadCredit.org.
Become a Secondary User
You may not have thought about how a loved one could help you on the path to rebuilding your credit score, but asking to be a secondary user is one of the easiest options. Suppose you have trusted family member or friend who manages their credit card accounts responsibly and has a stellar credit history. In that case, asking to be a secondary user on their account ensures their positive payment history and low credit utilization rate will be reported on your credit file, boosting your overall score. Just make sure to discuss clear boundaries and responsibilities with any credit card use.
Practice Proper Account Management
Paying bills on time, limiting the number of new credit cards or loan applications and even keeping old credit card accounts open all play a factor in your credit health so take steps to keep accounts in order. Set up bill payment alerts or autopay to ensure you never miss a payment and add a small recurring charge on your old credit card to keep it in good standing, as the length of credit history also impacts your credit score.
Finally, don’t ignore the spending habits that got you into debt and damaged your credit
score in the first place. Set a budget that shows how much you can afford to spend
on various purchases, identity and eliminate impulse spending triggers and shop
savvier to stretch your budget for the things you need to purchase by looking at
used options and applying online coupons available through deal aggregators like
CouponCabin.com.
Andrea Woroch is a nationally-recognized consumer-savings expert, writer and frequent on-air contributor who is passionate about helping families find simple ways to spend less and save more. Andrea has appeared on popular shows like Today, Good Morning America and NBC Nightly News. Her advice and articles have been featured in the New York Times, Time, Money, Forbes and Real Simple.
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Read More:
7 Steps to Getting Your Finances in Tip-Top Shape This Spring
From Gas to Groceries: Expert Tips to Save on Your Household Expenses
5 Financial Resolution Mistakes & How to Avoid Them
