The Most Important Credit Improvement Tip
There are many ways to improve your credit, but before anyone sets out to improve a credit score, the first step is assuring yourself that you will stick with it. The worst thing to do is to start a very difficult task and then simply give up. So convince yourself that this is going to be your focus for then next month, then three months, then year.
First consider whether or not to pay off debt or invest in savings. There are such things as good debt and bad debt. For example: if you have debt that has an annual percentage rate (APR) smaller than the annual percentage yield (APY) you're getting on a CD or savings account, you may not want to pay off the debt. This is because you can earn money off the money that you would otherwise use to pay off debt. A great tool to decide whether or not to pay off debt or invest in savings is very useful.
The credit reporting industry can be opposite from intuitive thinking sometimes. Some methods that you think might improve your credit score may actually work against you, so be sure to investigate the method you choose before actually making a move. One example of this could be consolidation of revolving credit. You may think that if you consolidate all of your credit cards into one and close the rest, your score may improve. But, actually closing many revolving lines of credit may actually work against your score.
The most common reason for a low credit score is late payment of a bill such as a credit card or auto payment. It is not the lacking of funds to pay bills, but more or less simply forgetting to pay a bill. We all have busy lives with sometimes far too much on our plate. If there were only as easier way to remember the reoccurring bills without having to remember them, many people might have it a bit easier and a better credit score. It turns out that this seamlessly impossible task isn't so impossible anymore with the introduction of automatic bill pay.
Bill pay is a fairly new feature of most banking institutions (within the last 5 to 10 years) that is very useful. Now your credit cards may have this feature of auto bill pay or bill pay, but how many credit cards do you have and do they guarantee payment will take place? Chances are you have more than one card and the auto transaction isn't guaranteed by the credit card company which leaves you wondering at the end of the month if you really have paid your bill or not. The convenience of having all your bills paid from one location, with one website to check, and the peace of mind of a guarantee from a bank that the bill will be paid is priceless (most banks will guarantee payments are made, but be sure to make screen shots of your auto bill pay setup).
Using auto bill pay is such an easy way to improve your credit score because paying bills on time more significantly impacts your score than any other method, and this feature is virtually effortless. Auto bill pay usually is a free option from most banking institutions; if it isn't, shop around-- U.S. Bank offers free bill pay with a guarantee as many other banks do as well. You also will save money by using less paper checks. Start increasing your score today by remembering to auto pay your bills. Set it and forget it, but do remember to keep enough money in your checking account; that can cause a whole different set of issues.
More money saving and credit improving tips are out there, so don't feel hopeless.
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