Picking up from How to Build a Strong Credit History (Part 1), here are some additional tips on what you can do to solidify a strong credit history – and a good credit score – for yourself.
- Do not miss any monthly payments on your outstanding debts – Missing even one monthly payment on your credit cards, student loans or any outstanding debt you have will likely appear as a negative mark on your credit report and will almost certainly affect both your credit score and your credit history. As a result, it’s crucial that you do not miss any monthly payments on outstanding debts you have. You may want to set up automatic payments for some of these monthly payments in order to ensure that you don’t forget to pay them.
While you may only be able to pay the monthly minimum payment on these debts, if and when possible, try to pay a little bit more than the minimum payment so that you are not just paying off the interest (and are making some headway with paying down the principal debt).
- Pay down your credit card debts – One of the primary factors that contributes to your credit score and your overall credit history will be your debt to asset ratio. This means that, if you have a significant amount of debt and not very many assets, your credit rating will be lower than those with less debt and more assets. The good news is that you can adjust this ratio in your favor by diligently paying down your debts, including your credit card debt.
Some of the best ways to achieve this include focusing on paying more than the monthly minimum payments by only using credit cards for certain purchases (to limit the new amount of debt you rack up on your credit cards) and cutting back on other, nonessential expenses (to free up funds to use towards paying off your credit card debt).
- Avoid opening new lines of credit if it’s not necessary – Although department stores or other retailers may offer you attractive deals to open up a new line of credit with them, it’s important that you avoid doing so if you are trying to pay down your total debts and improve your credit score and overall credit history. Department store credit cards often are associated with high interest rates, and having another monthly payment to keep track of can increase the likelihood that you may miss one of your monthly payments and inadvertently damage your credit score.
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