12 Months to Better Credit and Lower Interest Rates

Many people have several credit cards. Your credit score takes into account how many cards you have and how many of them have balances. So, if you have small balances on a few cards, it’s a good idea to pay those off and only use one or two. That way, the scoring algorithm will see you have, for example, two cards out of eight with balances instead of six out of eight.

Your amount of available credit is also important. Try to never use more than 30 percent of your credit at any time. It seems strange, but the rule basically is the less credit you need, the more lenders are willing to provide. So, if your overall available credit is $10,000 and you typically only use under $3,000, you are in good shape.

If you are still having problems with your credit score, you can use one of the top credit repair companies to help you repair your score.

An on-time payment history improves your credit score. Budget and plan your expenses so your utilities, credit cards and installment debt are paid on the due dates. Over 12 months, you’ll demonstrate you are conscientious about your debt. If you need encouragement, check your credit history on a periodic basis. Some platforms will list every on-time payment, so you’ll be able to see you are making progress.

Typically, debt is one big charge or loan you are paying off over time. If you are given a good interest rate at the time you borrow that money, it costs you less in the long run. So if you plan on a big purchase, like a car, give yourself time to build up your credit rating before signing off. With a better score, you should get better terms, leading to more available cash and debt that’s easier to pay off. When you pay off that debt, your credit score continues to improve.

Sometimes it may feel like you can never overcome negative marks in your credit history, but your recent activity matters. You can make huge strides over 12 months just by making small changes to your spending habits. In the end, it will make it easy for your to stay on solid financial footing. You may even find yourself upgrading to the best credit cards for your credit score once you’ve achieved your goal.