If your credit score needs a lift, bookmark these tips.
It’s no secret that millennials aren’t fans of using credit. In fact, according to a July 2015 Experian report, millennials use less credit than in generations past. Financial gurus like Rachel Cruze, daughter of money maverick Dave Ramsey, says let go of the credit cards because they keep you indebted. That’s true if you don’t pay the bill, on time, every month.
Credit is not all bad, but you do have to manage it. If you’ve missed the car payment or that $100 unpaid medical bill has turned into a $300 collection (err, late fees anyone?), help is on the way.
Millennials have an average credit score of 625, which is 25 points lower than Generation X and more than 60 points lower than baby boomers, according to a study by gobankingrates.com. Follow these tips to improve your score.
Request a free credit report. Go to creditkarma.com to view your credit report and scores anytime. Register to receive a free report, tips to boost your score and fraud alerts.
Pay your bills on time. Credit payment history makes up 35% of your FICO score. Lenders want to know that you pay bills on time. Set up automatic payment through online banking.
Open a secured credit card. A secured card requires you to make a deposit against the card’s limit. If you qualify for a $500 secured credit card, you must deposit $500 on to the card. Purchases reduce the available balance and minimum payments are required monthly. Making consistent, on-time payments for six months to one year will increase your score.
Remove errors from your report. To correct inaccurate or incorrect information on your credit report, contact the major credit bureaus—Equifax, Experian or TransUnion. Click here to get started.
Keep balances low on revolving credit. Amounts owed on your accounts make up 30% of your FICO score. Having a high balance on your accounts means you’re overextended or likely to pay late or miss payments. If you have a $1,000 balance, try to keep the amount owed to less than $300 to keep your score in good standing.
Myfico.com is a good resource to learn about increasing your credit score and achieving your goals.
Tanisha A. Sykes is a writer and editor living in New York City. Follow her on Twitter @tanishastips.