Big changes are coming. The bulk of the new Credit CARD Act provisions go into effect in February, which may change the way many of us use credit.
While some consumers will benefit, others may find it difficult to access credit at all. In fact, a few credit card companies have already begun cutting off customers without explanation, just a rude surprise at the register.
Instead of being at the mercy of changes to laws and credit card company policies, take action to improve your credit score now so you don’t have to worry about what may come. Here are some tips to get you started:
1) Pay your bills on time every month
The single most important thing you can do for your credit score is to pay at least the minimum payment (the amount you’re required to pay) for each bill on time every month.
2) If you have past due bills, pay up and stay current
If you’ve made some mistakes with your credit, you’ll need to settle up to demonstrate that you’re able to pay your debt.
3. Pay down your credit cards
Not sure where to start? A good rule of thumb is to pay down the credit card with the highest interest rate first (while also paying at least the minimum payment on other cards). When you’ve paid down that balance, move on to the card with the next highest interest rate, and so on.
4. Spread yourself thin
If you have multiple credit cards, try to spread your charges across them and keep your balances low. Shoot for less than 30 percent of each card’s credit limit. If you don’t have several credit cards, it’s not necessary (or recommended) to open accounts just to spread out your debt.
5. Don’t close accounts you no longer use
Closing accounts can hurt your credit score because it lowers the total amount of credit available to you. Instead, dust off those old cards and use them at least once a month on smaller purchases, like gas or take-out. Each month you pay your bill on time, the credit card company will report you as a-okay.
6. Don’t open new accounts you don’t need
And try not to open too many accounts in a short period of time.
7. Check your credit report regularly and dispute inaccuracies
Start by getting your free credit report from Quizzle every six months. Learn what’s on your credit report and how things are reported. If you see something that doesn’t look right, dispute it with the credit bureau. In Quizzle, it’s as simple as clicking the “Dispute this with Experian” button next to the account in question.
Lastly, be patient. Improving your credit score can take time. Just like a diet, there are no quick fixes. Be responsible with your credit, pay your bills on time and use your head — pretty soon, you’ll be reaping the rewards of good credit.
Ann-Marie Murphy is the Community Builder for Quizzle.com, an online service that provides free and easy ways to manage your home, money, and credit — all in one spot. She pairs her experiences in financial services with her writing skills to help consumers better manage their personal finances.