About 54% of Black Americans report having poor to fair credit, which is any score below 640. Having good credit gives personal financial freedom. It proves to lenders that a person can pay off their debts.
But if a person doesn’t have good credit, there are some simple steps to improve it.
Pay Bills On Time. Payment history makes up thirty-five percent of a credit score. This is the most significant portion of a credit score. Late bill payments can also cause the interest rate on credit accounts to rise - meaning higher monthly payments.
Keep Credit Utilization Low. Having credit cards is an excellent way to work on building credit, but the key is to keep most of the credit available. Lenders will begin lowering credit scores at five percent utilization; however, the effect is nominal until a person hits thirty percent.
Get A Secured Credit Card. A secured credit card works like a regular credit card but requires a downpayment from the borrower to secure the amount. Whatever the borrower puts down - say $500 - becomes the credit limit.
The lender reports on-time payments to the credit bureaus, positively affecting scores. Lenders will return the deposit after a set term of responsible spending.
Improving poor credit takes time and persistence. Good credit is crucial in this country to do everything from buying a house or a car to qualifying for a cell phone or bank account. Following some of these essential tips can help improve and maintain a good credit score.