[HOW MILLENNIALS CAN IMPROVE THEIR CREDIT SCORES] April 8, 2015 Your credit says a lot about how you manage your money. If it is high people will think you know how to manage your money, and if it is low they may not have faith in your ability to manage money. Banks, lenders and employers will judge whether or not they want to do business with you based on your credit score. If you don’t want to miss opportunities because of your credit score it is time to change it. For many young adults they are just getting to a point where they realize that their credit score does matter. In fact, According to a report by Experian, millennials between the ages of 19 and 29 had an average credit score of 628. Although it may not seem that bad, it is 50 points lower than the national average. The age group holds the lowest credit scores among Americans. How can millennials improve their credit scores? It is not by avoiding credit cards, and it’s not by relying too heavily on credit cards either. If you do either of those it is not too late to change. Your credit score is always changing. Here are a few ways to help you change your credit score for the better. Pay all your bills on time – Payment history is worth a large chunk of your credit score. Having a good payment history can help to improve your credit score. Having one late payment reported can lower your credit score. •
Never ditch a phone plan or utility bill – Phone plans and utility bills are not usually reported on your credit report, but if you go into default it can negatively affect your credit score.
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Check your credit reports from all three credit bureaus once per year – Be persistent when it comes to your credit score. Make sure to check it throughout the year and stay informed.
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Improve your “credit utilization ratio.” – It is usually recommended that you use no more than 30% of your available credit. Try to get your credit utilization ration to 30% or lower.
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Start building credit– if you cannot get a credit card, a great way to build our credit is to get a secured credit card. You can also become an authorized user on a parent’s credit card account.
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Build an emergency fund – having an emergency fund can help you to stop relying on credit cards. Instead of using a credit card for an unexpected expense you can use your savings.
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Stay on top of your student loan debt. – Many millennials have student loan debt that needs to be repaid. Pay your student loans regularly and stay on top of them.
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[HOW MILLENNIALS CAN IMPROVE THEIR CREDIT SCORES] April 8, 2015 •
Don’t close old or paid-off credit cards. – Even if you don’t use your credit card, it is accounted for in your credit utilization ratio. Keep old card so you don’t increase your utilization ratio.
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Never carry a balance on a credit card. – try to buy items that you have the money to pay for or have to pay for anyway. That way when it is time to pay your credit card bill you will not have a balance.
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Make your payments and savings automatic if you have dependable earnings. – pay your bills before you see the money. You have no way of spending it on other things.
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Never use a credit card to buy things you cannot afford. – Once you buy something you can’t afford your credit card troubles will begin. It is debt that you cannot repay and will gain interest. Visit FinLit.com if you need more information.
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