Sunday, May 5, 2019

How to Improve and Protect your Credit Score - and Your Spouse’s Too

If you are hoping to buy a home or a new car, or even apply for a loan or a new credit card, the 3-digit number known as your credit score can figuratively make or break each of these scenarios.
Generally speaking, the higher the number, the more likely you are to qualify for loans and credit cards with great interest rates, which can save you a lot of money in the long run.

If you know that your credit score is on the low side, as is your spouse's, don't despair. These numbers are not set in stone, and they can definitely be raised with some work on your part. Let's look at how you can increase your credit score, as well as your sweetie's:

Pay Your Bills on Time, Every Time

When lenders look at your credit report and score, they are understandably really interested in how often you pay your bills on time. Past performance is typically a good indicator of future behavior, and if they see that you routinely pay your Visa, car loan and other bills past the due date, they will take notice. If your busy schedule has caused you to run behind on your payments, you can set up automatic bill pay through your bank, or through each company that you owe money to. This will have a three-pronged positive effect: one, your bills will automatically be paid on time; two, your credit score will start to go back up and three, you won't be changed huge late fees for being even one day late.

Pay Off Your Debts and Keep Balances Low

If you and your spouse have gotten a bit carried away with your credit card spending and the balances are getting really high, this can also cause your credit score to drop. Your score is calculated in part with a credit utilization ratio, which takes all of your credit card debt and divides that number by your total credit limit. Lenders usually like to see low ratios of 30 percent or less, so if you are maxing out your cards, it's time to pare down debt.

Start by vowing to stop using the cards and use the Dave Ramsey snowball plan to whittle down the balances. Basically, you will pay off your smallest credit card bill first and when that one is down to a zero balance, you attack the second smallest bill, but add in the payments you were making on the first card. If you also have a car loan and/or a student loan, you can strive to pay more than you owe each month; this will help you to pay down these amounts sooner. Since you may be saving a couple of hundred bucks a month from now avoiding costly late fees, you can put this money towards these balances.

Protect Your Hard Work

Now that you are on your way to getting that credit card score up again, you want to protect your progress as much as you can. The last thing you need is for some cyber criminal bozo to get a hold of your identity and start racking up charges on your Visa. To prevent this from happening, invest in an ID theft protection plan. The best options keep a vigilant eye on your credit cards and other accounts and alert you right away if they spot something amiss.

Finally, Let's Talk about Some Common Myths

As you work on boosting your credit scores, you might hear untrue advice from well-meaning but misinformed friends. For instance, some people believe that checking your credit will hurt your score, but this is not the case; you can check it as often as you want to see how your progress is coming along. Another common myth is that when you and your babe said I do, your credit score merged into one. You and your spouse will continue to have separate credit histories and credit scores, and joint accounts that are paid late will negatively impact both numbers.

You've Got This!

If you have been stressing out about your low credit score, it's time to pull yourself up by your bootstraps and know you can take control of your financial situation. You've got what it takes to pay your bills on time and whittle down those debts and watch as your credit score rises once again to a wonderfully high number.

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