Automatic Rent Payments
by Electronic Check or Credit Card

Your credit score is evaluated based on these 5 categories:

• Payment history - 35%
• Total amounts owed - 30%
• Length of credit history - 15%
• New credit - 10%
• Types of credit used - 10%

Here are some tips to raise your credit score based on the 5 main categories that are used above.

Pay your bills on time

Your recent payment history is considered as more important than what happened four to seven years ago so it is important to start a habit of paying your bills on time and stick with it. What is considered as late payment? When you wait to pay bills for 30 days or more companies can report you to the credit bureaus for late payment and this negative information can remain on your credit history for seven years.

One step you can take is to set up a personal budget to make sure you alot enough of your income to pay your bills each month. Another step is to set up automatic payment for as many of your bills as your can such as your rent, utilities, phone bill, etc. That way you don’t have to worry about whether you are late or not each month. If you have medical bills, negotiate a repayment schedule that works for you and pay that down on time.

Lower the amount owed on credit cards

Credit cards are not free money. You have to pay it back so don’t run up large credit card bills. That has a very negative impact on your credit score. Credit card companies report the amount you owe each month and it does not reflect favorably on your credit score when your credit cards are maxed out to their limit. Work at paying down your credit card balances so you are only using a portion of your credit limit. This will increase your credit score.

Applying for multiple credit cards at once to increase your credit limit will have a negative impact on your credit score. It is better to do without and pay down existing credit cards. Remember the addage: Use it up, wear it out, make it do or do without!

Keep old credit card accounts open

When you pay a credit card down and don’t want to use it anymore, it will help your credit score to leave that account open. Just put that card away in a secure place. This old account will add to your lenght of credit history and improve your credit score.

Only open new accounts that you need

In department stores, you are often asked if you want to open a credit account for their store. As an incentive they may offer you a discount. Remember that too many new accounts can hurt your credit score. Keep the number of cards that you use to a manageable minimum. Tell the clerk, “No thank you, I am protecting my credit score!”

Manage the accounts you have well

Show that you can manage the credit cards and loans that you have responsibly. That is what creditors want to see when they are looking at your ability to pay a home or car loan.

We live in a culture that says, “Buy what you want now and worry about paying for it later.” This does not lead to happiness or freedom. Instead, it adds to your stress and causes you nothing but worry in the long run. I have found that you have to start by living within your means, then you will have something leftover to invest with. How you invest your extra time and talent will lead to your financial freedom.

So let’s start with financial discipline. Have you ever sat down and drawn a line down the middle of a piece of paper, then put what you make on one side and what you spend per month on the other? That is how you begin to create a personal budget and get a handle on your finances. If you are spending too much or have nothing left to invest, what can you give up each month?

You have to be willing to sacrifice something now to get something  better for  yourself or your family in the future. You can spend the extra time researching or studying new skills you want to learn. Invest your time researching needs and put together a personal business plan you can start on the side that will meet those needs. It’s best if you work on something you are familiar with.

We’ve put together a resource page that includes a list of free spreadsheets and software that you can use to create a personal budget. Start here, cut your expenses, invest in study and research, and you can get started on the road to financial freedom.