Top 5 Ways to Improve your Credit Card Health with your Credit Score

Author Nickels
Read time 5 minutes read time

The path to a good credit score is paved with… healthy credit. And maybe a few good intentions.

But seriously, if you aren’t paying attention to your credit card health, you aren’t living up to your full credit potential. This goes without saying but in case someone needs to hear it – your credit rating does not determine if you’re a good person, or your potential for growth. What it does determine is how companies, employers and lenders view you as a borrower. Which makes having a good credit score worth the effort.

According to a study released by the Consumer Financial Protection Bureau one in every ten adults does not have any credit history with one of the three nationwide credit reporting agencies. That’s 26 million adult consumers whose credit scores could use some resuscitating. Whether you fall in that category or not, we recommend checking-up on your credit card health.

These didn’t make it into our top 5 because they are bottom line basics:

  • Paying your bills on time
  • Never miss a payment
  • Check your credit history on an annual basis

Now to get to it. Here are our top 5 ways to improve your credit card health with your credit score.

Improve your credit worthiness

This one could be a little hard, especially if you have no credit or a less than ideal credit history. If you’ve applied for credit cards and never seem to have any luck, this tip is for you. Have a family member or close friend add you to their credit card as an authorized user. To be beneficial to your credit card health, you’ll want to verify that the account you’re being added to has been open for a while, is in good standing and doesn’t have any history of missed payments. If you decide to ask a friend or family member for help, make sure you are both clear on expectations, usage and payments.

Check for inaccuracies

Everyone makes mistakes, even credit card companies. When you’re reviewing your credit report, be on the lookout for anything that doesn’t look right. If you find something report it immediately to your credit card company and the credit agencies. You’ll need to file a dispute with each of the agencies where the incorrect information is reflected in your history.

Set a precedence

Lenders want to see a longstanding history of usage and payment before investing in a borrower. That is true whether you’re looking to buy a home, finance a vehicle or need to take out a personal loan. A credit card can help you standout as a credible buyer but if you rarely use your card, you aren’t building the history you need to improve your credit score. Consider setting up your household monthly bills, such as utilities, internet for automatic payment to your credit card. These are bills you would pay on a regular basis, why not have that outgoing money help you improve your credit score? The goal here isn’t to avoid paying those bills, so if you set up automatic payments to your credit card be sure to payoff that card each month, just like you would the actual bill.

Don’t ignore your past

If you’ve ever defaulted on a credit card and it’s been turned over to a collection agency or the debt has been “charged off,” meaning the credit card company believes it will not collect the balance owed – don’t hide from it. Deal with it. Paying off defaulted and seriously delinquent debt can help drive your credit score in the right direction. If you can’t afford to payoff the full balance, talk to the company managing your debt about a repayment plan. It may be tempting to ignore a charged-off credit card, but that negative history can stay on your report for as long as seven years. A paid debt, even a delinquent one, will give you a better foundation for reaching your credit goals.

Pick a card, any card?

When applying for credit cards, don’t apply blindly. Figure out what type of card would most benefit your lifestyle. If you like to travel, a card with travel rewards might be the best one for you. If you mostly use your credit card to purchase everyday household needs, then a card that gives rewards for grocery purchases could be the way to go. There are so many cards, with so many benefits it can be confusing to figure out which one is right for you. But don’t get drawn in by the flashy promises of rewards, make sure to do your homework and read the fine print. Ultimately, you will want to go with the card that offers the best annual percentage rate (APR). You’ll also want to be on the lookout for annual fees and payment guidelines.

Improving your credit card score has more benefits then just increasing your number. When your credit card health is in good order your overall financial health benefits. Follow us on twitter for more helpful tips.