Easy-to-Implement Credit Score Improvement Tips for Millennials
Sunday, July 1, 2018
Millennials have had a rough go of it, financially speaking. Many are weighed down with vast amounts of student loan debt, and with automation limiting job opportunities for those without college degrees, making a living is becoming an increasingly tricky prospect.
Luckily, when it comes to matters of credit, there are more than a few simple changes to your financial behavior that can improve your credit score.
A credit score is a three-digit number indicating the likelihood that you will default on your financial obligations within two years (a score that most lenders use when determining whether or not they’ll provide you with a loan or pursue other business with you).
How can you demonstrate financial trustworthiness through your credit score moving forward?
Pay your bills on time
Unfortunately, this is sometimes easier said than done. But it’s an important step, especially when you consider the fact that a full 35% of your credit score is determined based on your payment history.
Here are a few strategies you could pursue to get your bills paid on time:
- Rein in that spending – Limit your credit card usage to what you can afford immediately (groceries, movie tickets, the occasional dinner out), rather than big price tag items or services that will take you weeks, months, or even years to pay off
- Make multiple credit card payments throughout the month – Try to pay off an expense as soon as you make a credit card purchase, that way you’re not caught off guard and don’t forget about debts owed at the end of the month
- Play catch up as soon as you notice you’re behind – Even if you notice a forgotten expense the day after your payment was due, don’t delay—send in the cash as soon as you can, because even slight pauses can have a noticeable impact on your score
Get a credit report
This is an incredibly important step, and one that you should take every so often to ensure that you’re not in any financial jeopardy.
Getting a credit report from one, or from all three, of the major credit reporting companies—Experian, TransUnion, and Equifax—can be very helpful in identifying any purchases made by identity thieves, or mistakes on your credit history.
Both of these issues stand to impact your credit score, which in turn impacts your ability to successfully apply for and obtain loans and additional credit cards, or remain eligible for other borrowing-based financial services, like loans and mortgages.
Limit yourself to one credit card
Doubling up and getting an additional card in the hopes of improving your score is not necessarily a great strategy.
In fact, it’s probably detrimental to your long-term financial health, from both a credit perspective and a savings perspective, since you’ll have two or more cards to pay off each month instead of just one.
Also, keep in mind that even applying for a card—that is, submitting an inquiry to your credit card company of choice—has an impact on your score, so stay very cautious when pursuing additional lines of credit that you may not need.
There are all kinds of additional strategies you can deploy to maintain or build a better credit score as a millennial. But the most important, and immediate, step you can take is to make sure that you’re up to date with your payments—get started in that arena, and you’ll be well on your way toward a better financial future going forward.