Having a good credit score is vital if you want to get a car loan, mortgage, or business loan. It tells money lenders whether you’re a safe bet when it comes to repaying your debts. If you’re like many Americans, you likely have tens of thousands of dollars in mortgage and credit-card debt. If you can’t afford to make the minimum payments on your debts each month, you could seriously damage your credit score, making it hard for you to get credit in the future.
Unless you take action, your debt will keep growing. The good news is there are plenty of ways you can improve a poor credit score. Find out how you can take control of your credit score with these four tips.
- Always Make Your Minimum Payments
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Missing a credit-card payment may not seem like a big deal, but it can have a negative impact on your credit report. Be sure to pay the minimum required amount on time each month to avoid hurting your credit score.
When you’re late on a payment, it increases the amount of money you owe and the amount of interest you have to pay, making it even harder to catch up on payments. If you can’t make the minimum payment, it’s a surefire sign your debt is out of control. Consider retiring your card and focus on paying down your debt, so it’s more manageable.
- Get Tax Levies Removed From Credit Reports
When you don’t pay your taxes, the Internal Revenue Service (IRS) can levy your assets to pay your debts. Tax levies do a lot of damage to your credit score and appear on your credit report for as long as seven years after they’re paid.
Certain eligible taxpayers may qualify to have tax levies removed from their credit report once they enter into a payment plan with the IRS and make at least three payments. It’s worth checking to see if you qualify to have your tax levies removed.
- Repay High-Interest Debts With a Low-Interest Loan
When it comes to paying down debt, focus on credit cards and loans with the highest interest fees. The longer it takes you to pay off a high-interest debt, the more it costs you in finance charges. If you have a lot of debt, consider applying for a low-interest loan and using the money to pay off your high-interest debts. While you will still owe money to a lender, at least you won’t spend as much to finance the debt over the long term.
- Review Your Credit Report Each Year
Mistakes happen, so it’s a good idea to make sure your credit report is accurate. Once a year, obtain a free copy of your credit report from one of the three credit-reporting bureaus. Check to make sure the information is accurate. If you find any mistakes, contact the credit bureau right away to have them corrected.
If you have trouble keeping on top of your debt, it could hurt your chances of getting a credit card, loan, or mortgage in the future. You can get on top of the issue by getting professional help and taking control of your credit score.