How many times have you sworn to yourself that you will finally work in improving your credit score? How many “this time I’m doing it seriously” moments have you had? How about starting now?

In the beginning, working on your credit score will feel like the most difficult thing to do, but you could actually make it happen if you commit.  Remember that your credit score will affect the financial products you get access to, and it could also be the thorn that keeps you away from your home ownership plans. If you are planning to buy a car, poor credit could be the reason for an unnecessarily expensive car loan.

So, how do you improve your credit score and then buy one of those dreamy Burlington homes?

1.    Build and Stock up your war chest

Now, this might sound like we’re coming on too strong, but here the truth – you must have an emergency fund, money put away to help you deal with future emergencies. In as much as it’s hard to put away money now instead of buying a new pair of shoes, the decision to put away money now for use tomorrow could be the best decision you ever make.

The only reason why you find yourself deep in a credit card debt is that you take on too much credit and you end up spending your paycheck paying off one debt after the other while racking more debt. It’s a vicious cycle, really. But since you don’t want to look for a loan the next time you have an emergency, why not start by putting some money away in an emergency fund today?

Keep in mind that it might take you about six months to recover financially, and your credit score will be down the drain for up to 10 years.

One of the most practical ways of building a war chest is through living within your means. Be frugal. Avoid unnecessary expenses. Bootstrap and tighten your situation now, to have something for the dry, cold, or rainy days and nights ahead. So, if it means not buying new shoes or eating out for a year, do it!

2.    Manage your credit card debts: pay all but one

In the financial sense, all but one means paying off all your credit card balances in full each month, except one. You should do this at that time of the month when credit cards are reported to the bureau. Note, however, that the single credit card with an unpaid balance should have a balance over $2 but not more than 8.9% of available credit. Doing this will keep your credit score within the healthy range, and you will earn some points for it.

3.    Debt is never equal to good credit

Note that if you have really bad credit or even no credit history, racking up new debt will not boost your credit score. Your credit history is only one block when building your credit score; taking new debt will not help with things. Just avoid debt and pay off your bills/ loans on time. Remember that a new high-interest loan might set you on a downward spiral should you fail to pay it back on time.

Finally, tighten your budget, have the bureaus remove the negative points on your history one after the other, and it’s okay to buy an old used car you can afford than a new car you cannot afford. And, don’t run too many hard inquiries at the same time unless you want to appear financially reckless.

Published by Rose bella