- Why Your Credit Score is Important
- Increasing Your Credit Score; Step 1
- Increasing Your Credit Score; Step 2
3. Make Payments every month, at least $15 more than the minimum
Now you will start making regular ON TIME - NEVER LATE payments each month to your card. I recommend already having the FULL balance that you owe in a savings account or set aside somewhere and then taking each monthly payment from that. No matter what you do, don't ever miss a payment and don't ever be late.....everyone get that?
NEVER, ever, ever pay just the minimum! I recommend paying at least $15 more than the minimum payment every month and not ever going lower than that. Let's use an example here:
Your minimum payment is $15, so you would pay $30 that month or more, but NEVER pay just $15!I think on average $50-100 is a good monthly payment. It really depends on your credit limit and what 40% of that is and interest rates, etc. Your goal is to show that you are a responsible individual with credit and can make more then the minimum payment each month but you DO NOT want to pay your card off in full! The whole point of credit and increasing your score is to show consistent payments over time, THIS is what helps increase your score!
After 6 months of consistently making payments $15 or more than the minimum you should see an increase in your score. After a year of using this system, get another credit card and continue the same. It works and I did it and got my score from the low 400's to 849!
This isn't an advocacy to go into debt, REMEMBER you should get OUT OF DEBT first before even thinking of increasing your credit score. If you are already in debt up to your eyeballs, then you must work on paying that off and then work on improving your financial future and having a high credit score ensures low interest rates and nowadays a nice place to live sometimes, seeing that landlords are beginning to check your credit. AND...make sure you have the full balance in funds before charging it, in case emergencies arise.
Any Questions on any of these steps or your credit score, feel free to email me:
thefrugaladdict@gmail.com
Your goal is to show that you are a responsible individual with credit and can make more then the minimum payment each month but you DO NOT want to pay your card off in full!
ReplyDeleteREMEMBER you should get OUT OF DEBT first before even thinking of increasing your credit score.
Bev, I was wondering about those two statements you wrote. If you don't pay off your credit card every month, then you will be in debt. Also, if you don't pay off your credit card every month you will be charged interest, which to me is a waste of hard earned month.
I have heard over and over to pay off your credit card every month and you will increase your credit score.
I was just a little confused......
Thanks for your comment anonymous! Sorry you are confused, let me elaborate a bit more here:
ReplyDeleteIf you carry balances on your card that you do not currently have the funds on hand to pay off in full, I count that as a "debt".
The series on increasing your credit score is to use a credit card as a tool to do this, making sure you HAVE the money for the full balance in other funds (savings, etc). That if the situation arised, you could immediately pay off the balance in full.
If you are carrying a small balance, like say $50 on a store card.....of course that pay that off in full.
What I'm speaking of is getting a credit card specifically for this plan that I did, and using 40% of the balance and the making monthly payments.
Interest is a waste of money, I agree...but in terms of how I used my cards to increase my score and reach the score I did, the interest to me was not such a big loss in the long run, let me give an example:
Recently we were just looking into a mortgage and found with my score and my husband's score we were able to get the lowest interest rate out there! Although, we didn't want to pursue buying a home right now, it was good to know that if we ever did need a loan or mortgage, we could get the lowest rate and thus save thousands that what someone with say a score of 650 would have to pay.
Hope that made some sense, it does go against some things that are taught out there, but I've been there and DONE THAT and successfully raised mine and my husband's credit scores using the steps I shared.
Now on another note, I was just commenting on another blog about store credit cards. I do recommend paying those off in full and those aren't really something you would use to do this plan. They are good tools to have and I may blog about that in another post.
Bev
Your post is very interesting. I can see how that would be a good plan of action to get your score up. Thanks for the info :)
ReplyDeleteThanks for your comment 1stopmom! ; )
ReplyDelete