10 Ways Millennials Can Improve Their Credit in 2017 - The Dime Turner

Official blog of Refresh Financial

10 Ways Millennials Can Improve Their Credit in 2017

Last year, we found out that a very small number of millennials have excellent credit. This is for many reasons. Such as from lack of employment, all the way through to just not using credit at all, resulting in no credit score to judge. As millennials find themselves nearing middle age, the importance of caring for your credit is becoming more and more apparent. The great news is that it is never too late and never too difficult to start turning your credit around.

If you’re looking to improve your credit score in 2017, here are ten actions you can take that will do just that:

1. Get and maintain a credit card

Because many millennials have no credit, building your credit up can be as easy as getting yourself a credit card and keeping it in excellent standing. In just months, you will see an improvement in your credit score. Prior to you having a credit card, the bureaus had nothing to use to assess your credit score. If you do not make use of credit, they have no way to know how you are with credit. The only way to have a good credit score is to use credit like a boss. That means using it responsibly and within your means, and paying it off as much as you possibly can every single month. You do this, and you’ll see your credit grow.

2. Never miss a bill payment

Though your mobile, cable, electricity and gas bills do not report to the credit bureaus when you’re in good standing, if your account goes to collections, the collection agency will report that. There is only one way to avoid any utility bill related derogatory remarks on your credit report, and that is by paying your bills on time every month without fail. There are two lines of defense you can set up to prevent ever forgetting. The first is to set reminders in your smart phone. Like, really annoying and persistent reminders. The second is to automate your payments. Set them up with your online banking, so even if you forget, the bill still gets paid.

3. Lower your credit usage percentage

Your credit usage percentage is the percentage of your total available credit that you’ve used. So if you have $10,000 in credit products, and you’ve used $2000, then your usage percentage is 20%. You need to make sure your percentage is below 50% and ideally below 30%. If you can get your usage down this low, you will see a boost in your credit score.

4. Look at your credit reports

We avoid what stresses us out and that often includes putting our eyeballs on our credit reports. It’s time, though, to pull up our adult pants and face the music. Get your credit report from Equifax and Transunion and get to know your credit. Fix everything that needs fixing, dispute anything that needs disputing, and make sure that credit report reflects, accurately, the truth of your credit history. Once you’ve done that, make sure you keep getting your reports every year, so you can ensure that everything that is being reported to the bureaus in your name, is actually you and is accurate. Or better yet, sign up for credit monitoring, so you can watch your credit all the time, rather than only once a year!

5. Diversify your credit

If you’ve only got one small credit card or just a single auto loan, perhaps it’s time to spread out and take on some more credit if it makes sense for your situation. Having a diverse group of credit products in your name in good standing is going to make it a lot easier for the bureaus to see that you’re a low-risk borrower and you deserve a higher credit score.

6. Swap your high interest credit products for lower interest credit products

While this won’t directly affect your credit score, it can have a sort of domino effect on it. Lowering the amount of interest you’re owing on your credit products is going to make paying your bills and bringing your balances down easier and faster. Depending on what sort of balances you carry, your interest rate can have a significant impact on how much you have to pay back every month to keep your balances dropping. Of course, it is a sort of catch-22 in that people with higher credit scores have the most access to the best interest rates, so if you find you’re having trouble accessing new products with better rates, bring your score up and try again.

7. Spend less using credit

If you have high balances on your credit cards, make all your purchases with debit or cash, rather than credit. That way the credit balances you carry consistently will come down. If you want to make sure you’re collecting your rewards points on your credit cards for your purchases, use the card to buy what you need to, so long as you have the cash in your bank account so that you can pay back what you’ve spent right away.

8. Start an emergency savings fund

An emergency fund won’t have a direct affect on your credit score, but will create a safety net for you, should anything go wrong. You don’t want to be forced to default on your loans or credit cards when the unexpected happens, so prepare for it. Make sure you have enough saved away so you can still make your minimum payments no matter what happens.

9. Live within your means

This is probably the hardest thing to do in this whole list. So many of us live outside of our means, essentially relying on credit for our lifestyle. Instead, make a budget and stick to it. Remind yourself that instant gratification will prevent financial security in the future. Putting off that gratification will ensure you don’t take on more debt than you can handle, and your credit score will steadily improve.

10. Try a credit building program

A quick, easy and painless way to improve your credit score is to get started on a credit building program. Almost everyone is approved, so it doesn’t matter how terrible your credit score is. You can still get your credit where you want it to be. As you make your payments in the program, it appears on your credit report as a normal installment loan. The best part is that at the end of it, you have a lump sum with which to start your savings. It could be used to pay down other debts or to start your emergency fund. Whatever the case, a credit building program is the easiest, fastest, and debt-free way to a better credit score. You can find out more here.

It’s just a myth that improving your credit score is difficult. It’s really not. Just a few simple changes to how you look at your money and you will see an improvement in no time. It comes down to self-discipline and how motivated you are to see that score go up. If you’ve had enough of living paycheck to paycheck and stressing about credit bills, getting through this list of ten things will get you so much closer to a life lived without credit stress.

Are there any ways to increase your credit score that you think we missed? Let us know in the comments!

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