As a young adult, you need to be careful about your financial decisions and how they may impact your future. Building and maintaining your credit score falls under this practice, where following the right approaches can secure your financial foundation and help you live a more comfortable life.
While it might seem a bit stressful to think about managing your credit score, the goal becomes easier when you learn a few tips and tricks. To help you, here are 10 credit score hacks every young adult should know.
Smart Strategies To Build And Protect Your Credit Score
1. Don’t Apply For Everything Under The Sun
While learning how to boost your credit score, you need to bear in mind that applying for new credit can ultimately hit your credit score for typically a year and stay on your report for another year. While shopping around for new credit cards or loans, try to apply for credit products within 14-45 days.
2. Keep Tabs On Your Credit Report
To make sure that you are taking the right steps and managing your expectations, you should check credit score by contacting one of three credit bureaus in the U.S. You can get one free report every year, while also being able to check your reports weekly.
3. Dispute Any Errors On Your Credit Report
When you get your credit report, you can spot errors like incorrectly-reported delayed payments. By asking credit bureaus to rectify these mistakes, you can resolve these issues and see an improvement in your credit score. This can reflect positively on your credit report within 30 days.
4. Make Your Payments On Time
Making your payments before they become past due is an effective way to improve your credit score. This has a major influence on your credit. Similar to using a productivity app for office task reminders, you can find a solution to remind you about making personal payments on time.
5. Maintain An Ideal Credit Mix
Whether you are researching tips for first-time homebuyers or first-time car owners, you may often see the suggestion to maintain an ideal credit mix. This refers to having at least one installment loan and one credit card or line of credit in your name. This also contributes to your credit score.
6. Don’t Run Your Credit Dry
When you have multiple lending products, it can be pretty easy to spend all of your approved credit. But if you spend more than 30% of your credit, it can negatively impact your credit score. Instead, you can save some petty cash in a money transfer app to use during the month.
7. Pay Credit Card Bills In Full Whenever Possible
It is a common misconception that you should carry forward some of your credit card balance. Besides hitting you with high interest rates, this can also affect your credit utilization ratio. When you make your credit card payments in full, it helps you lower both of these factors.
8. Sign-Up For Rent Reporting And Utility Bill Reporting Services
The impact of debt on your finances is undebatable. That’s why you need to find any avenues that can improve your credit score. By signing up for services that report your rent and utility bill payments to credit bureaus, you can make gradual but noticeable improvements to your credit.
9. Become An Authorized User
You can become an authorized user on the credit card of a family member or friend with a good credit score. This automatically gets you a leg up for your credit score improvement. But you need to ensure that whoever you are turning to for this suggestion uses their credit responsibly.
10. Continue Monitoring Your Credit Report
While improving your credit can help you save some money in the long run and open doors to financial solutions like a brokerage platform, you need to stay on top of credit score monitoring. You can do so by checking your credit report regularly. This keeps surprises at bay and helps you take big strides without larger risks.
These easy tips help you race through the road to a good credit score. This helps you put together a better future for yourself and your loved ones.
