A credit score is one of the most important aspects used to determine your creditworthiness and access to credit. The two major factors that can help to increase your credit score include timely payment of bills and having more than one credit type in the good book. Here are some of the main bills that can help boost your credit if paid properly: Here are some of the main bills that can help boost your credit if paid properly:
Credit Card Bills
Open credit cards and always paying at least the minimum amount due monthly are vital to having good credit. Ideally, if you can make full payments on your balances every time you are done with charging, then that’s excellent. Another factor that contributes positively to your credit score is the current credit utilization rate; it is preferred if your credit card balances are low as a percentage of your total credit limit. Paying greater than the minimum amount due if you charge your balance and use credit on a month-to-month basis benefits in the reduction of interest costs and portrays to lenders that you can manage credit cards properly.
Installment Loans
Revolving credit such as credit card loans, on the other hand, involves making minimum periodic payments and allowing the credit available to be used again while installment ones like auto loans, student loans, and personal loans where you make a fixed amount of payment regularly over some time also contribute to credit scores. Paying off installment debts on time is an indicator that you can handle different credit products and larger loan amounts. The fact that installment loans are paid off or paid down is also beneficial since it reduces the debt-to-income ratio which in turn positively affects scores.
Utility Bills
As for cell phone bills, electricity bills, and other utilities, these are not strictly speaking indicators that are taken into direct consideration but payment histories may be reported to specialty consumer reporting agencies. This could also hurt scores from rental property screening services, insurance companies, or lenders whereby these late utility bills are seen as the alternative credit reports. This is because avoiding issues with your utilities involves paying the bills on or before the due dates.
Rent Payments
Similar to utility bills, rent payments are not usually included in your credit report as a regular expense. However, if you decide to seek a residence and the landlord filters the applicants through a specialty bureau such as TheRental Bureau, then your good credit record in paying rent will be of help to you. Pay your rent on time each month to show that you understand how responsibilities are to be handled. It also increases your likelihood of being approved for apartments that disqualify tenants based on the credit reports.
In particular, timely repayment of any obligations associated with the credit lines or loans that were previously incurred is useful for maintaining a sound credit history. Have low balances on the credit card and ensure to make timely payments and avoid missing payment deadlines. These habits put your scores on a path to healthy growth and development hence the need to embrace them.
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