Focus on Your Behavior to Change Your Credit History

credit history ideas behavior good report scoreWhen it comes to your low credit score, there is no instant fix. Mistakes, old accounts and fraud can come off your credit report quickly. If you have bad credit because of your past financial behavior, it’s there to stay for seven years or more.

A major part of your credit score is your credit history. Improving your credit history should be looked at as a process and not an easy button. There are behaviors that are rewarded and behaviors that are penalized. Get to work on the good ones and not only will your credit benefit, your finances will as well.

Tackle the Easy Stuff

Check your credit reports for any fraudulent accounts, reported debts that have been paid, or negative reports that are over seven years old and should be taken off by now. Make sure your credit history is accurate.

Dispute the old reports or debts that have been paid. Report any fraudulent or potentially fraudulent activity so you know your identity hasn’t been stolen or there aren’t other things you need to look into.

The credit bureaus are required to respond to your request within a set time, if they don’t, they’re required to take the disputed report off. If you don’t have any of these problems on your credit report, credit repair companies won’t do you much good because there isn’t a quick fix to your low credit score.

Build Over Timehow-to-calculate-cred-score_eng.png

Your credit report is essentially your credit history with other metrics tossed in the mix. Your credit utilization along with the number of accounts are also factored into your score.

Your credit utilization is the percentage of available revolving credit that you are currently using. Essentially, it’s how close to being maxed out you’re currently living. For example, if your credit limits are a total of $15,000 and you currently owe $12,000 on those cards, your utilization is 80%. Below 30% is where you want to aim if you’re trying to set a goal for your utilization.

Like most things there’s a sweet spot for how many lines of credit you should have. As for a specific number, there isn’t one, because everyone’s situation is different. Neither having the most nor the least number of credit cards will necessarily help your score one way or the other. 

A good rule of thumb is to only get more credit when you need it and to not close old accounts when you no longer need them. If you’re wanting to take advantage of a new rewards card that meets your needs perfectly then go ahead and apply for it. When it replaces your old card that is paid off, don’t close it and just let it sit at home. Both will look good on your credit history and you won’t receive any negative reports. Also, your utilization percentage should decrease as well.

History Wasn’t Written in a Day 

Your credit history is nothing more than a reflection of your creidt habits and behaviors. The history that matters stretches back seven years and in some cases of liens and other public record documents it can be 10 years. The only way to improve your credit history is to replace the old irresponsible credit use with newer responsible credit use.

Responsible behaviors include paying down your debt, making payments on time, not exceeding your credit limits, paying your bill in full each month, not just the minimum payment, and making sure you can pay for anything you put on your credit card. Remember, it isn’t an installment plan. Credit cards work best when they’re paid off each month.

If you’re in need of a way to track your credit cards and make sure you have the money set aside for your bills at the end of the month, use Mvelopes to plan your spending and track your progress. It can simplify your finances by putting your bank and credit card accounts in one place.

 

Test Drive Mvelopes for FREE