Unless you have a perfect credit score, you probably want to improve it.
Some personal finance “experts” say you shouldn’t worry about it. Just eliminate all your debt and never borrow money again. Then you won’t need a credit score anyway.
I understand the sentiment. And it’s certainly a good idea to eliminate debt. But going off the grid and ignoring your credit score isn’t smart. You might have an emergency and need to borrow money someday. If you’ve let your credit score deteriorate, then you could be up a creek.
So keep track of your credit score, even if you don’t really like doing it.
The good news is it’s easier than ever. A lot of credit cards will give you your score for free. I think two of my three major credit cards do that.
Keep in mind, I’m not all that worried about my own credit score. There’s no reason it would drop significantly unless I stopped paying my bills. I’m also not going to borrow money any time soon. If you’re in a similar position, great.
Still, you never know what’s going to happen. Even if your credit is excellent, you want to keep an eye on it in case something weird pops up. Identity theft is not uncommon, and the sooner you know about it, the sooner you can address it.
Say somebody opens up a fraudulent account under your name, defaults, and then it goes into collection. That sort of thing can trash your credit score. So you have to monitor it, or you could get screwed.
Things like this do happen… someone goes to buy their dream house only to find out their credit was wrecked because of identity theft.
So set up a way to check your credit score once a month—either through a credit card or a reputable app.
Now, the obvious way to make your credit score go up is to pay your bills on time. All of them—period.
One missed credit card payment, one missed car loan payment… any hiccups like that stay on your report for seven years.
One missed payment will also hit your credit score by 70 to 100 points. And it will take your score 18 months to recover. So, even one missed payment is not good.
The easy way to address this is to set up automatic payments. You can’t miss a payment if you’re automatically paying your bills on time. Just don’t overdraw your checking account because then the payment will bounce.
Debt utilization—or how much of your credit limit you’re using—is 30% of your credit score. A quick hack here is to ask for a credit limit increase.
Sorry, that doesn’t mean charge more. The point is to increase your limit so you’re using less of the credit available to you.
Or you could pay off the balance weekly rather than monthly. That’s something you could set up to happen automatically, and it would keep your balance really, really low.
Do these simple things, and you’ll boost your score.