(ThyBlackMan.com) The turn of the new year is an excellent time for everyone to take a look at their finances, no matter what you have planned for 2020. Maybe you’re in the market for a new car, saving for a down payment to place on a home, or simply want to prioritize paying off student loan debt. Whatever your financial goals may be, one thing remains the same: your credit should be as strong as possible.
A great credit score can be the difference between being approved or denied for a loan application, receiving a low interest rate on a mortgage, getting fair refinance terms that makes debt management possible.
Not sure where your credit stands? Know that it could use a little boost? Or perhaps you just want to maintain healthy credit and avoid any dings on your file that could affect you in the future. Keep reading for tips that can help you improve your credit in order to achieve your 
goals this year and beyond.
- See Where You Stand
This first step can seem a little scary, especially if you know that you’ve been struggling to meet mandatory monthly payments on time. But before you can rebuild your credit, you need to rip the band-aid off and see where you stand.
Fortunately, this information comes at no cost to you; many companies offer consumer credit reports free of charge. If you don’t know your current number, get an Intuit Turbo free credit score for an easy-to-read copy of your report. Keep in mind that while there’s no hard definition for what constitutes a “good score”, here’s how lenders typically view the following numbers:
- > 629 – Bad credit
- 630-689 – Fair credit
- 690-720 – Good credit
- 720 < – Excellent credit
- Check for Inaccuracies
Not happy with the number you see? Don’t panic. Reports aren’t always perfect and there’s a chance that inaccurate information may be one of the reasons your credit score dropped. If anything in your history file doesn’t look quite right, dispute your credit report to have the negative mark removed.
Credit reports update regularly, so it’s important to keep a close eye on your score to solve these types of problems as soon as possible should they ever arise.
- Pay Your Bills on Time
The Golden Rule for healthy credit management? Pay your bills on time, every time. Even if you can only afford to submit the minimum payment, do it. This shows lenders that you’re responsible and on top of your monetary obligations.
Maybe you need to cancel your Spectrum cable subscription, eat out fewer nights per week, or limit your discretionary spending in one way or another. Free up funds however possible in order to afford your bills and watch your credit score raise little by little. If you can’t find space in your budget to “trim the fat”, so to speak, you might consider a debt consolidation loan—but before you’re fully aware of the benefits and risks beforehand.
- Optimize Your Credit Utilization Ratio
“Credit utilization ratio” is calculated by adding up all of your existing credit card balances and dividing the amount by your total credit limit. In other words, it measures how much credit you use compared to the amount available to you. Let’s say you only have one credit card with a limit of $1000 and currently owe $750; your credit utilization ratio would be 75%.
Every lender is different, but most prefer to see that figure around 30% because it suggests, rather than nearly maxing out your card, you borrow within a reasonable amount. Paying off debt and keeping balances low are the best ways to improve your ratio, but those with good credit history can also ask for an increased credit limit. Let’s say you spent that $750 on a Samsung 4K TV and can afford to pay it off in full on your next statement; you shouldn’t be penalized by a high utilization ratio.
Asking for a limit increase will result in a soft check, meaning your score won’t take a hit, but the lower utilization rate you then achieve could improve your score. You can also apply for new a credit card to increase your credit limit, but only do so when necessary, because this results in a “hard hit” that could lower your score.
Credit cards don’t have to be feared, so long as they’re used wisely. Keep these tips in mind and set yourself up for a future free from financial stress.
Staff Writer; Bobby Jones